All of my reporting here is on one account devoted exclusively to trading credit spreads. Each bar in the graph represents the percentage change of this account for that month. If I started the month at 100K and I reported a 16% gain, the account would be at 116K at the end of the month.
HowardCohodas Index Options Credit Spread Trading Journal
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A couple of things that bother me about how you report. You have stated repeatedly that these credit spreads are a minority allocation to your portfolio, something on the order of 20%. I may be wrong, so feel free to post the actual percentage. If so, it would be impossible to earn 16% on portfolio, as it would imply earning an average of 80% on each position, if calculating return on risk on 20% of your total portfolio.
Obviously these positions are not earning 80% on risk, they're averaging 16%, and therefore you're calculating your return on $ at risk, not the return on a minority portfolio allocation. In and of itself that's no problem, as long as it's understood that the entire account is at risk (less the credit received). In this case, risking upwards of 90% of the account.
In March you posted a >21% loss. There is no way that you covered the average NDX vertical at a 21% loss. It's obvious that you're calculating your profits on risk capital and your losses on a "diluted" portfolio. If I am wrong that please correct me. If so, you are misrepresenting your performance. No legitimate manager reports performance in such a manner.
Also, how is it possible to "run out of cash" to close positions when there is no variation margin involved in a debit spread? The net liq on the account would have no impact on your ability to cover a vertical spread unless all spreads blew-out and you would lose more to cover than would be lost holding to expiration. IOW, the possibility of going debit due to microstructure (10.00-wide spread offered at 10.50).
You have no credibility if you are reporting winners as return on "dollars at risk per position" and losers on a diluted portfolio. You are, without question, calculating your winners on "dollars at risk", and I suspect not reporting losses in the same manner. HUGE problem.
Obviously these positions are not earning 80% on risk, they're averaging 16%, and therefore you're calculating your return on $ at risk, not the return on a minority portfolio allocation. In and of itself that's no problem, as long as it's understood that the entire account is at risk (less the credit received). In this case, risking upwards of 90% of the account.
In March you posted a >21% loss. There is no way that you covered the average NDX vertical at a 21% loss. It's obvious that you're calculating your profits on risk capital and your losses on a "diluted" portfolio. If I am wrong that please correct me. If so, you are misrepresenting your performance. No legitimate manager reports performance in such a manner.
Also, how is it possible to "run out of cash" to close positions when there is no variation margin involved in a debit spread? The net liq on the account would have no impact on your ability to cover a vertical spread unless all spreads blew-out and you would lose more to cover than would be lost holding to expiration. IOW, the possibility of going debit due to microstructure (10.00-wide spread offered at 10.50).
You have no credibility if you are reporting winners as return on "dollars at risk per position" and losers on a diluted portfolio. You are, without question, calculating your winners on "dollars at risk", and I suspect not reporting losses in the same manner. HUGE problem.
I report only on the isolated account devoted to trading index options credit spreads. Any discussion regarding my complete portfolio is outside of my reporting here and mentioned only in response to questions.
I report my results in three ways, each aimed at communicating a different perspective of the strategy.
The month on month graph reports the account change from month to month. It therefore incorporates the results of trading, the size of the cash reserve and trading costs. There is no variation in accounting for profits vs. loses. It is strictly the account balance month to month.
The Iron Condor report addresses the return on a chunk of quarantined funds used to support credit spread trading in a given series. The implications here are that the same chunk of funds are used to cover one or more spreads. One spread if its mate that would form an Iron Condor is unavailable. Two if the mate is opened. More than two if one of the spreads is closed at 80%+profit and a spread is opened to replace it using the same funds.
The spread report is the most granular. It reports the return on the spread by itself, even if no additional funds were required because it was part of an Iron Condor.
Any speculation outside these parameters of my reporting are to be avoided and any conclusions based on such speculations are likely to be inaccurate as they are based on false premises.
I report my results in three ways, each aimed at communicating a different perspective of the strategy.
The month on month graph reports the account change from month to month. It therefore incorporates the results of trading, the size of the cash reserve and trading costs. There is no variation in accounting for profits vs. loses. It is strictly the account balance month to month.
The Iron Condor report addresses the return on a chunk of quarantined funds used to support credit spread trading in a given series. The implications here are that the same chunk of funds are used to cover one or more spreads. One spread if its mate that would form an Iron Condor is unavailable. Two if the mate is opened. More than two if one of the spreads is closed at 80%+profit and a spread is opened to replace it using the same funds.
The spread report is the most granular. It reports the return on the spread by itself, even if no additional funds were required because it was part of an Iron Condor.
Any speculation outside these parameters of my reporting are to be avoided and any conclusions based on such speculations are likely to be inaccurate as they are based on false premises.
Well Howard´s system is too convoluted for me to figure out.
I can appreciate an end of month account balance report though and just skip the ins and outs of what he is doing.
For me, the account balance on any given day, or end of month is fine.
I´m more curious if he has figured a way to make money steadily.
Credit spreads could make money, if you were using short term spreads and able to judiciously apply either a PUT or a CALL spread and had a forecasting system that would let you do it, reliably. I have trouble though using two month out credit spreads. That seems like an impossibility to me. But what do I know? I failed twice at credit spread trading.
I can appreciate an end of month account balance report though and just skip the ins and outs of what he is doing.
For me, the account balance on any given day, or end of month is fine.
I´m more curious if he has figured a way to make money steadily.
Credit spreads could make money, if you were using short term spreads and able to judiciously apply either a PUT or a CALL spread and had a forecasting system that would let you do it, reliably. I have trouble though using two month out credit spreads. That seems like an impossibility to me. But what do I know? I failed twice at credit spread trading.
What was the net liq balance on the close of wednesday (the day of the low) before expiry vs end of Feb balance?.
I detect an inconsistency in the Cohodas. One Cohodas is smaller than the other. Either that or I'm in the presence of greatness.
Look at your charts, the drop was substantially recovered in 2 days, between wednesday and friday. That move produced large gyrations in the option prices. A wiped out situation could become totally recovered or even profitable...imagine buying spreads EVERY day during the drop, by friday you would have been sitting pretty...only because of the sharp bounce.
Now if you could predict the bounce accurately...I'm dreaming...
I detect an inconsistency in the Cohodas. One Cohodas is smaller than the other. Either that or I'm in the presence of greatness.
Look at your charts, the drop was substantially recovered in 2 days, between wednesday and friday. That move produced large gyrations in the option prices. A wiped out situation could become totally recovered or even profitable...imagine buying spreads EVERY day during the drop, by friday you would have been sitting pretty...only because of the sharp bounce.
Now if you could predict the bounce accurately...I'm dreaming...
Howard I'm a newbie I don't have anything against You,we have been hit hard from the market in the same period and now I'm self assessing myself and is very hard to admit that I'm a loser.I've decided to stop trading temporarily to analyze my faults,to do this I need to be clear to find answers.Now I've a question for You:are You really sure You can be clear with Yourself.Can You look at Your face in a mirror and feel Yourself clear?If yes i suggest You to do it a lot of times to increase Your awareness.If no I suggest You to stop to continue at doing what are You doing now and give back people's money this probably will guide You on the path to be clear with yourself.If you deceive people You'll be deceived, on the long term believe me it doesn't pay.My personal opinion is that You could be a better trader helping people here at no cost like Atticus does and earn surely more from the market isn't enough for You?For me would be enough.
Could be this Atticus secret(+hard work)?I don't have anything against You is Your life maximum respect.
Could be this Atticus secret(+hard work)?I don't have anything against You is Your life maximum respect.
Quote from kinggyppo:
scroll down to the second video, and quit your whining!
http://masteroptions.com/?cat=3
Good videos. Thanks for posting it.
What happened to Dean?
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