Riding the Inflection Point

[maximumpossiblesuffering]

This will be my 2019 trading journal using mostly short to medium term option strategies. Time frames of particular interest will be daily, weekly, and monthly.

I will be more aggressive with initial money management set at .74% of starting account value per trade plus 5% of accumulated profits, up to 3% total risk allowance. Account blowup is considered 20% of initial starting value. Should this threshold be reached, I will close this account and stop short term trading for at least three months.

Riding the Inflection point means I will be looking for an edge based on market structure, scheduled events, or even subtle changes in the risk environment. Just as some coin dealers use coin grading “arbitrage” to take advantage of subtle differences in coin grading that can make a huge valuation difference or real estate developers buying in the “Path of progress” and initiating a zoning change request for greatly increased market value, I will looking similar situations involving options strategies.

This journal will emphasize actual trades and less theory than my other journal. I will post screenshots of my performance results on a weekly basis.

 

[smallfil]

You should be able to beat the S & P 500 considering you are trading options. Do not know you personally, but, you seem to be one of the smart ones on ET based on reading your posts. Good luck.

 

[Frederick Foresight]

That's quite a buildup. Here, let me help:

 

[maximumpossiblesuffering]

Looking at correlated assets and overnight action, my guess is ES will trade on both sides of its RTH open by a significant amount, assuming ES does not start to seriously unravel. A lot of ES’s gains since the beginning of the year had a trade treaty with China built in, as I see it.
While there have not been many follow through down weeks in this ten year bull market, when there has been, the market had a “healthy” correction.

Interestingly, Bitcoin has seen recent accelerated price increases. My guess is scared Chinese ans maybe other Asian money is behind the move. Although I see Bitcoin as a dubious investment, it is possible many in Asia see it as a safer alternative to the Yuan right now.

The trade war will impede global growth and risks spillover effects as prominent highly leveraged Chinese companies get tested. Developing countries will likely get hit hard, but developed countries, including the US will still feel the impacts of the dislocations caused by the trade war. Of note, US Steel (X) has almost fully retraced its $1 billion Pittsburgh plant investment announcement wide range bar of a few days ago.

Although my new account is funded, I will not be able to trade until Wednesday.

Note to self: Less economic talk and more specific trading ideas.

 

[maximumpossiblesuffering]

That's quite a buildup. Here, let me help:

Thanks for holding off on posting a “Taps” YouTube video!

 

[Frederick Foresight]

 

[destriero]

You spent a week strategizing that AAPL loss. This should go well with your average var of $30 a month. I expect great things. Your risk tolerance it inversely-proportional to the tonnage of diarrhea you post here.

 

[maximumpossiblesuffering]

You spent a week strategizing that AAPL loss. This should go well with your average var of $30 a month. I expect great things. Your risk tolerance it inversely-proportional to the tonnage of diarrhea you post here.

#7 46 minutes ago
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ElCubano likes this.

Sorry you lost money on AAPL, because I didn’t. Less diarrhea, more trading, and more risk? Fair enough, you got it. However, comments from someone who refuses to post their equity curve since inception of a relatively new account is suspect, right? After all, what would you say if someone suddenly posted apparent six or seven figure returns and left out key information?

At least ElCubano likes it.

 

[destriero]

lol dude, ask yourself where (todays!) $1MM gains in the account came from...

Your Friends at AAPL.

Are you going to bless us with some one lots...eventually? When does the trading begins? I think you should take it slow.

Buy 50 shares.
Sell 1 call.
Buy 1 lot wings.

I just handed you the keys to piker-heaven! The half-lot synthetic butterfly! Actually it's a straddled backspread.

 

[maximumpossiblesuffering]

The dice seem loaded. Loaded for gold, that is. Looking at the recent rise in Bitcoin, increasing evidence of financial stress in some large Chinese companies, and Central Banks around the world favorite motto seeming to be “There is no such thing as having too easy of a monetary policy”, I have to think monetary related tangible assets might come back into vogue. Although traders and investors seemed to have accepted the current level of geopolitical tensions as normal, they are still high and could cause flights of capital out of countries under stress into gold. Continued increased equity market volatility may cause greater diversification from equities to gold as well.

I am bullish in gold and have initiated the following bullish trades.

B1 June MGC (Mini Gold, 10 oz.) 2019 @1297.70. Stop 1293.00. Objective open.
B1 (Calendar spread) S1 June 25, 2019 GC $1350 Call, B1 July 25, 2019 $1350 GC call at a debit of $3.60. Gold’s implied volatility is low right now and expect it to increase if gold rises. $1350 seems to be a medium term resistance area. We may eventually test the $1400 level in the next few months.

Looking to enter a call backspread during US RTH for May 17, 2019 expiration by selling 1 GCM 1290 call, buying 4 GCM 1305 calls at a net credit of $.80 or so. Money management will allow a $350.00 loss on this trade. Although theta cost is high, should China and the US reach a trade agreement, a quick spike down in gold prices should not hurt me as the position payoff diagram below indicates: