Quote from NoDoji:
Yes, if you're short and naked, you are absolutely right
Nope, I'd be right even if I were Shaq and packed in an Armani suit.
Taking 103K to 1.2million by Year End 2008
- Thread starter neke
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Nope, I'd be right even if I were Shaq and packed in an Armani suit.
Weekly Update for week 41 ended 10/25/2008
Sombre week, down 80K (20%). Got caught the wrong way on most major positions. A little gain on monday, followed by deep whipsaws on Tuesday as the market (SPY) moved from 97 to above 98 to back to 95 to 98 and back down to 95: lost 60K in stock and options as I lacked conviction. Recovered some on Wednesday, but lost big on Thursday trying to catch the falling CME knife.
Need to scale back on size and scale up on caution next week.
Sombre week, down 80K (20%). Got caught the wrong way on most major positions. A little gain on monday, followed by deep whipsaws on Tuesday as the market (SPY) moved from 97 to above 98 to back to 95 to 98 and back down to 95: lost 60K in stock and options as I lacked conviction. Recovered some on Wednesday, but lost big on Thursday trying to catch the falling CME knife.
Need to scale back on size and scale up on caution next week.
Code:
Opening Balance: 406,228
Net gain for the week -79,866
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Net Balance: 326,362
Number of Trades 28
Number of Profitable Trades 13
Since Inception of Thread 01/13/2008 - 10/25/2008
Opening Balance: 102,615
Net gain (Less Margin Interest) 238,747
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Balance Before Withdrawal: 341,362 (Up 233%)
Cash Withdrawal -15,000
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Net Balance 326,362
Number of Trades 974
Number of Profitable Trades 570
Top/Bottom Discretionary Trades for the week
TICKER ENTRY DATE/TIME EXIT DATE/TIME QTY PURCHASE AMT SOLD AMT GAIN/LOSS TYPE
BIDU 2008-10-20-09-47-40 2008-10-20-11-08-59 3000 741000 756600 15566 SHORT
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BIDU 2008-10-20-11-58-24 2008-10-20-15-56-10 3000 764481 750462 -14053 SHORT
SPY 2008-10-21-15-14-02 2008-10-21-15-45-58 8000 783520 768000 -15544 LONG
SWGWR 2008-10-21-12-15-25 2008-10-21-14-23-57 20000 109000 92000 -17331 SPY PUT
CMEKC 2008-10-23-12-41-50 2008-10-23-15-04-43 7000 157500 126000 -31603 CME CALLSorry about the loss. Have you considered perhaps changing to a covered call option writing strategy? I am sure you know as well as anyone how expensive options are. By writing OTM December 08 calls on US Steel for example you could make 19% by the end of December. That is fully covered too. Sure X can go down 19% in a month, but the stock is already well below book value.
If you took your 326,362 and did this over 1 year (326,362 * 1.19 ^ 12) equals 2,631,862 (I kept thinking I was getting a calculator error that number was so large.) Very conservatively beating your goal of 1.2 million.
Who knows how long this very lucrative high IV of options will last. I think you should strongly consider writing options.
cheers
If you took your 326,362 and did this over 1 year (326,362 * 1.19 ^ 12) equals 2,631,862 (I kept thinking I was getting a calculator error that number was so large.) Very conservatively beating your goal of 1.2 million.
Who knows how long this very lucrative high IV of options will last. I think you should strongly consider writing options.
cheers
Quote from neke:
Weekly Update for week 41 ended 10/25/2008
Sombre week, down 80K (20%). Got caught the wrong way on most major positions. A little gain on monday, followed by deep whipsaws on Tuesday as the market (SPY) moved from 97 to above 98 to back to 95 to 98 and back down to 95: lost 60K in stock and options as I lacked conviction. Recovered some on Wednesday, but lost big on Thursday trying to catch the falling CME knife.
Need to scale back on size and scale up on caution next week.
Code:Opening Balance: 406,228 Net gain for the week -79,866 ------------------------------------------------ Net Balance: 326,362 Number of Trades 28 Number of Profitable Trades 13 Since Inception of Thread 01/13/2008 - 10/25/2008 Opening Balance: 102,615 Net gain (Less Margin Interest) 238,747 ------------------------------------------------ Balance Before Withdrawal: 341,362 (Up 233%) Cash Withdrawal -15,000 ------------------------------------------------ Net Balance 326,362 Number of Trades 974 Number of Profitable Trades 570 Top/Bottom Discretionary Trades for the week TICKER ENTRY DATE/TIME EXIT DATE/TIME QTY PURCHASE AMT SOLD AMT GAIN/LOSS TYPE BIDU 2008-10-20-09-47-40 2008-10-20-11-08-59 3000 741000 756600 15566 SHORT --------------------------------------------------------- BIDU 2008-10-20-11-58-24 2008-10-20-15-56-10 3000 764481 750462 -14053 SHORT SPY 2008-10-21-15-14-02 2008-10-21-15-45-58 8000 783520 768000 -15544 LONG SWGWR 2008-10-21-12-15-25 2008-10-21-14-23-57 20000 109000 92000 -17331 SPY PUT CMEKC 2008-10-23-12-41-50 2008-10-23-15-04-43 7000 157500 126000 -31603 CME CALL
Hey! Looks like CSCO circa 2000.
You are making the mistake most people make, thinking that covered calls are easy money. By the way your 19% is by the end of December, that is 2 months return not one month!
The IV has not always been this high. But suppose you bought DRYS when it was at $120 a year ago, and kept writing covered calls. Let's even assume you were getting 19% every two months (hasn't been that high before now), and you have been getting it right each time. Guess what? The stock has been declining at rate of 28% every two months (1 -17/120 ^ 1/6). So effectively your account should be down to (1.19 * 0.72) ^ 6, or 40% of the original value. Yes better than owning just the stock (down 86%), but still a huge loss of 60%. Got it?
Your example illustrates my point actually. If you were stupid enough to pick the worst stock ever to write covered calls on, DRYS, you would only be down 60% vs 86% down in the stock. Really if you saw you stock go from $120 to 16 do you think you would be happily writing calls on it all the way down?
Your stock can be tanking 19% every 2 months and you still break even. Stocks can appreciate or go sideways you know too. This is the option writing opportunity of a lifetime. You got it?
first of all, congrats for your p&l, high risk trades but you got the balls of steel that have to go with such trades and made it so far. great.
About your post, I think you are actually comparing apples and oranges. Obviously with different exposures you get different p&l with the same underlying move. If I understood correctly you wanted to make a point why your edge needs to be extremely good. All I am saying is that if you keep the exposure the same then your risk also stays the same. If all you wanted to say is that with extremely high leverage you better be a lot more often right than trading at more conservative levels then I agree.
You know what I really like about your trading style? You had quite a number of trades where you were simply dead wrong directionally, but quite a number of those you did not just cut but reversed into the opposite direction. Thats pretty cool and I guess what added to your bottom line as well.
About your post, I think you are actually comparing apples and oranges. Obviously with different exposures you get different p&l with the same underlying move. If I understood correctly you wanted to make a point why your edge needs to be extremely good. All I am saying is that if you keep the exposure the same then your risk also stays the same. If all you wanted to say is that with extremely high leverage you better be a lot more often right than trading at more conservative levels then I agree.
You know what I really like about your trading style? You had quite a number of trades where you were simply dead wrong directionally, but quite a number of those you did not just cut but reversed into the opposite direction. Thats pretty cool and I guess what added to your bottom line as well.
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