Alright time for another trading thread to add to the long list of threads. I've found some really good and interesting threads that I've learned a lot from. Kudos to optioncoach for the infamous SPX credit spread trader journal which I finally have completed reading the entire monstrous thing.
So I've been testing a strategy on paper since Jan as its my sad and pathetic new years resolution every year to try and come up with a trading strategy that I paper trade and eventually roll into production once I'm happy with it. For this year I paper traded a strategy (I"m not sure if this is an existing strategy with some retarded name like iron condor or butterfly). I'm just going to call the strategy "SUCK IT."
The strategy is simply to buy an in the money call or put debit spread with at least 3 weeks usually more till experation. I am only buying RUT spreads. On the same day that I buy the RUT spread I will hedge the spread purchase by selling an ITM IWM call or put. The goal is to have the long RUT spread stay in the money and gain value while the short IWM option loses premium value and HOPEFULLY by the time experation comes around, the RUT and IWM prices are close to where we started (similar to a calandar spread).
Why am I putting SUCK IT into production? On paper trading the strategy logged a nice 100% return for the year. The sept - november period did manage to generate a 17% loss for that time period however just this month alone has generated back 20% erasing the prior months losses and still ending the year at slightly over 100%. So I am happy with the paper returns and have decided to put some real skin in the game and put a portion of my aggressive portfolio towards this technique. At the risk of jinxing myself and having this thing blow up in my face.....I figured what the heck no risk no reward!
So as I said, I've finally decided to put some real money behind this thing. I'm looking at putting 30K towards SUCK IT and we'll see how it goes. Here are my current REAL positions:
bot jan 460/450 put/short jan 45 iwm put@ cost of $47
bot jan 470/460 put/short jan 46 iwm put@ cost of $52.06
bot jan 480/470 put/short jan 47 iwm put@ cost of $68.51
bot jan 500/490 put/short jan 49 iwm put@ cost of $53.82
bot jan 400/410 call/short jan 41 iwm call@ cost of $117.34
bot jan 440/450 call/short jan 45 iwm call@ cost of $208.54
bot jan 420/430 call/short jan 43 iwm call@ cost of $177.06
These positions were opened back in november and I am currently looking to establish some new ones for this month but due to pricing I may actually start purchasing positions expiring in February.
Here is an explanation of the position description above:
bot jan 460/450 put/short jan 45 iwm put@ cost of $47
"bot jan 460/450 put" this means that I am long the jan 460/450 put spread for which I had to pay.
"short jan 45 iwm put" this means that I have a short put sold at 45 for which I received premium.
"@ cost of $47" means this is my total cost of the position. So in this case the result of the cost of buying the RUT debit spread minus the premium from selling the short IWM option = $47. So in this case if RUT is above 460 by jan expiration I would incur a loss of $47 and this amount does include commission costs.
So I am now aboard the SUCK IT train and we'll see if it crashes and burns!!!!
So I've been testing a strategy on paper since Jan as its my sad and pathetic new years resolution every year to try and come up with a trading strategy that I paper trade and eventually roll into production once I'm happy with it. For this year I paper traded a strategy (I"m not sure if this is an existing strategy with some retarded name like iron condor or butterfly). I'm just going to call the strategy "SUCK IT."
The strategy is simply to buy an in the money call or put debit spread with at least 3 weeks usually more till experation. I am only buying RUT spreads. On the same day that I buy the RUT spread I will hedge the spread purchase by selling an ITM IWM call or put. The goal is to have the long RUT spread stay in the money and gain value while the short IWM option loses premium value and HOPEFULLY by the time experation comes around, the RUT and IWM prices are close to where we started (similar to a calandar spread).
Why am I putting SUCK IT into production? On paper trading the strategy logged a nice 100% return for the year. The sept - november period did manage to generate a 17% loss for that time period however just this month alone has generated back 20% erasing the prior months losses and still ending the year at slightly over 100%. So I am happy with the paper returns and have decided to put some real skin in the game and put a portion of my aggressive portfolio towards this technique. At the risk of jinxing myself and having this thing blow up in my face.....I figured what the heck no risk no reward!
So as I said, I've finally decided to put some real money behind this thing. I'm looking at putting 30K towards SUCK IT and we'll see how it goes. Here are my current REAL positions:
bot jan 460/450 put/short jan 45 iwm put@ cost of $47
bot jan 470/460 put/short jan 46 iwm put@ cost of $52.06
bot jan 480/470 put/short jan 47 iwm put@ cost of $68.51
bot jan 500/490 put/short jan 49 iwm put@ cost of $53.82
bot jan 400/410 call/short jan 41 iwm call@ cost of $117.34
bot jan 440/450 call/short jan 45 iwm call@ cost of $208.54
bot jan 420/430 call/short jan 43 iwm call@ cost of $177.06
These positions were opened back in november and I am currently looking to establish some new ones for this month but due to pricing I may actually start purchasing positions expiring in February.
Here is an explanation of the position description above:
bot jan 460/450 put/short jan 45 iwm put@ cost of $47
"bot jan 460/450 put" this means that I am long the jan 460/450 put spread for which I had to pay.
"short jan 45 iwm put" this means that I have a short put sold at 45 for which I received premium.
"@ cost of $47" means this is my total cost of the position. So in this case the result of the cost of buying the RUT debit spread minus the premium from selling the short IWM option = $47. So in this case if RUT is above 460 by jan expiration I would incur a loss of $47 and this amount does include commission costs.
So I am now aboard the SUCK IT train and we'll see if it crashes and burns!!!!