Taking 103K to 1.2million by Year End 2008
- Thread starter neke
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I agree this is not the strategy to go with in this environment but I would still consider a smaller position in selling vega. I advocated and put on the following when the vix index was priced the first time around 70 levels: i put on a long 1m and 3m gamma spx options position and sold vega in the 9m and 12m against it. The position was net long gamma and net short vega and initially delta neutral (hedged out the remaining with futs). The gamma long paid and will probably pay very well in those whipsaw markets while I lost some when front vol came in (vix dropped to 50ish levels before it came back to 70). initially the p&l will obviously be very much a function of how front vol will trade but if you are a good gamma scalper then you can make very good money even at those rediculous front vol levels. once the back end vol starts to come in you will make up for more than you may have lost ont he front vol due to the vol imbalance between front<-> back end. Actively trading the gamma on this position is extremely important to monetize the position.
Also starting to slowly leg into short index skew may be worth a consideration. Those are all ideas based on pure vol. Counter arguments welcome.
Also starting to slowly leg into short index skew may be worth a consideration. Those are all ideas based on pure vol. Counter arguments welcome.
Weekly Update for week 42 ended 10/31/2008
Solid week, up 62K (19%).
It was a week of consistent winning trades (18 of 22), although the losers were bigger than average.
Tuesday was the day worth mentioning. Shorted the gap up in the SPY morning in SPY puts, closing about half an hour later for a gain of $13K. Came back again later in the day shorting in options (put) and stock when the market tried to rebound. Was wrong, not correctly reading the strength in the rally. Lost 28K in option and 16K in stock, reversed and loaded up on SPY call and stock, and enjoyed the rest of the massive rally, gaining 37K in the option and 19K on the stock. (Of course I am pleased it worked out. If the market had whipsawed instead, I might have been rueing a mournful week.)
Still need to be cautious next week.
Solid week, up 62K (19%).
It was a week of consistent winning trades (18 of 22), although the losers were bigger than average.
Tuesday was the day worth mentioning. Shorted the gap up in the SPY morning in SPY puts, closing about half an hour later for a gain of $13K. Came back again later in the day shorting in options (put) and stock when the market tried to rebound. Was wrong, not correctly reading the strength in the rally. Lost 28K in option and 16K in stock, reversed and loaded up on SPY call and stock, and enjoyed the rest of the massive rally, gaining 37K in the option and 19K on the stock. (Of course I am pleased it worked out. If the market had whipsawed instead, I might have been rueing a mournful week.)
Still need to be cautious next week.
Code:
Opening Balance: 326,362
Net gain for the week 62,244
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Net Balance: 388,606
Number of Trades 22
Number of Profitable Trades 18
Since Inception of Thread 01/13/2008 - 10/31/2008
Opening Balance: 102,615
Net gain (Less Margin Interest) 300,991
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Balance Before Withdrawal: 403,606 (Up 293%)
Cash Withdrawal -15,000
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Net Balance 388,606
Number of Trades 996
Number of Profitable Trades 588
Top/Bottom Discretionary Trades for the week
TICKER ENTRY DATE/TIME EXIT DATE/TIME QTY PURCHASE AMT SOLD AMT GAIN/LOSS TYPE
SWGKL 2008-10-28-14-58-42 2008-10-28-15-56-38 20000 118000 157000 38679 SPY CALL
PYPWQ 2008-10-30-09-36-59 2008-10-30-10-41-24 10000 81000 101000 19830 POT PUT
SPY 2008-10-28-15-18-05 2008-10-28-15-56-18 6000 538500 557400 18877 LONG
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SPY 2008-10-28-13-28-17 2008-10-28-14-57-03 6000 538499 522327 -16195 SHORT
SZCWI 2008-10-28-13-30-36 2008-10-28-14-56-26 20000 122955 95000 -28286 SPY PUTBoyah!
Nice man. Have you considered trading futures? You seem to make most of your money trading SPY puts and calls. Why don't you just trade S&P futures? Much less commission than options, much tighter spreads and much more 60/40 favorable tax status than options. Not to mention you can lever up like crazy waay more than with options, or use very small amounts of leverage depending.
Until the recent market craziness, most of my trades were individual stocks and stock options, not SPY. I have benefitted by trading SPY options because of the big ranges.
I have thought of futures, and the reduction in spread costs, but I don't think I have been moved enough to do that. Besides I will need a new broker for that. One reason I am apprehensive of futures is the negative impact of heavy leverage. Unlike options when I can stake 20% of account and know that is the worst I can lose, in futures, if one is reluctant to take a loss on big leverage, the consequences could be huge in a crazy market like this.
I love it when someone makes more money in one week then others make in OVER a year. Be careful dude.
Usually the more money one makes the more risk they take. Although Im not certain how much more risk you can take then this trading style except for standing at the craps table in vegas.
Usually the more money one makes the more risk they take. Although Im not certain how much more risk you can take then this trading style except for standing at the craps table in vegas.
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