Taking 76K to 500K by Year End

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Hi neke. I hope you'll achieve your goal. Sorry about your drawdown but I think such drawdowns are unavoidable if you’re trying to turn 75k to 500k in less than a year.

Assuming you have correctly estimated your weekly edge at 50-50 20% gain 10% loss and you are going for a growth rate of 5.9% a week with 2.5 leverage, you can expect worst max drawdown to be above 70%.
 
Quote from polpolik:

Neke, are your option trades ATM or OTM in most cases?
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It depends on the time to expiration and my expected holding duration. I normally aim for the nearest out-of-money strike price. But if it is too far away, or the stock is expiring in a few days, I may go just for the in-the-money option. This reduces rate of deterioration of your premium.
 
Quote from hbiawos:

Neke,

I just started reading your thread today, and while I admit I haven't read the whole thing, I find it inspiring and validating to my own trading, which, when I post it, brings all the naysayers out in force.

Quick recap of my story. I've been trading stocks for 7 years. I recently decided to take $6k and $6k only just to see what I could do with it in options trading. That was in April. At the end of June my account was $70k. However, through a slew of several ill-advised trades on days when I was exhausted and distracted by other problems, my account now stands at $50k. A terrible drawdown, and the worst part is that if I'd just held the trades overnight (I almost exclusively daytrade) they'd have been stellar gainers. Bad habit of getting shaken out. But still a nice overall gain for 3 months. Something like 850%.


My strategy is simply to daytrade high-volume, high-liquidity stocks with good reliable spreads on the options Level II screen.
For example, BIDU. Yesterday. God, how I wish I'd been home. (it's one of my favorite high-beta stocks to trade.) Upgrade, gap up, stay up. The $190 calls had a range of $6.80 to $15.50. Let's say you'd bought just 20 of the calls at $7.50 (no one catches the low) and sold them for $14.50 (no one catches the high), that's a profit of $14k in a single day.

Yes, it can be done, you're doing it, and spectacularly I might add, damn the torpedoes, full speed ahead! Good for you for publishing your journal, too.

Maybe I'll start a journal on the options board. BTW: how do you access your nice spreadsheet profit/gain lists? Do you download them to your PC to Microsoft Word or something like that? No idea how to do that.

Happy trading, Neke
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That performance is commendable. Of course a 30% drawdown is normal with such a strategy. I hope you are not staking it all in one option. This is a really strong-trending market. Buying anything on the upward move in the morning almost always leads to bigger gains by close of market. Like all good things it could come to an end. You need to manage your exposure and know when the tide is turning.

I generate text files of my results using a VB program that looks at my downloaded text account statement and aggregates and summarizes according to my specified rules. I then embed the text into ET post using the [ code ] [ /code ] tags (omit the spaces, was added to preserve the tag).
 
Quote from neke:

I do my own programming using native programming languages like Java and VB, and use the APIs to link to the brokers (TWS API for IB and QuoteTracker API for Ameritrade). My back-testing (for strategies that can be back-tested) is done by gathering the requisite data in my Oracle database and doing the analysis.
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neke,

What are you using as data feed?

Thank you,

Stepan
 
Weekly Update for week 20 ended 07/13/2007

Spectacular week! I guess the right words to describe these past two weeks in the market is MOMENTUM MADNESS! I was reluctant to play it much until this week. Almost any stock with any quality that starts the day up finishes the day even much higher. That is obviously not surprising giving that the Nasdaq-100 index has risen by 2.5% each of the last two weeks. I could reel off the names of stocks that have shown such trends on one day or the other: CME, RIMM, AAPL, FSLR, CMI etc. I wish I had participated in all of them! At times like this it makes raking in money through the market look simple, since any Tom, Dick and Harry could hop onto a momentum stock in the morning and finish up the day higher still.

On Monday, I hopped onto the momentum in FSLR when I discovered it, leveraging using options. Bought 60 contracts at 10.20, closing at 13.70 before end of market for a gain of 20.4K. (Who would buy this stock and hold at those levels for 6 months?). Thursday bought 90 contracts of MA 165 CALLS at 5.7 after discovering the momentum (too late, what was I waiting for all day!). Held overnight till Friday and exited at 8.9 after that vertical move up about 10am, making 30K. After waiting for some time and seeing it holding firm, decided to load up 100 contracts of JULY 170 at 5.70. Big mistake! You do not buy the second day of a rally. Forced out at 3.90 for a loss of 18K. Another mover on Friday was SGR whose JULY 55 calls I bought and sold, making 23K. On the stock side, shorted 5000 ALNY at 25 on Monday (pre-market), and closed at 23 for a 10K gain.

Am I glad we have this momentum madness? Yes and No. Yes, because it makes it easy to rake in money on the long side. No, because when it's so easy to make money, it means a sudden sharp reversal is in the offing which will hurt unprepared, over-leveraged folks. I only hope I am not part of them.

Altogether lost 3K in Automated methods, and made 74K by discretionary methods for a total of 71K (60% for the week), the largest one-week percentage gain in the last one year. I am glad to be once again above my target trend line.

Here is one regrettable trade I missed. On the last pullback in the market on June 27, I saw this stock (PKX) which was on my watchlist and wanted to buy the JULY 120 call. the stock was at 115.6, and the options were trading bid 2.3 ask 2.7. I thought the spread was big (having lost a lot on spread costs in my prior year's bad option day-trades). I put in a limit to buy at 2.60 hoping it should be good enough for the market maker. My order failed to execute, and after some time the stock started up, never to come down again. Last time I checked PKX, the stock is at $150. Wow! I missed out on a potential gain of $27.30 on a cost price of $2.70, haggling over 10 cents!! That hurts.

For the next two/three weeks we have a barrage of earnings reports. With that come lots of opportunities to make (or lose) money. Need to remind myself not to overtrade.


Code: 
Balance B/F:                   		119,009
Gain for the week (Less Interest)        71,203
------------------------------------------------
Balance C/F:                   		190,212
Number of Trades	            	 26
Number of Profitable Trades    	    	 15

Since Inception of Thread   2/25/2007 - 07/13/2007

Balance B/F:                   		 76,636
Net Gain (Less Margin Interest)		144,576
Cash Withdrawal		       		-31,000
------------------------------------------------
Balance C/F:                   		190,212		(Adjusted balance before withdrawals is 221212, up 189% )
Number of Trades	           	 498
Number of Profitable Trades        	 296

Expected Balance at this time to be on track for Year-End Target : 
			       179,755
Status:			       Ahead of Target		(Based on adjusted balance before withdrawals)

Top/Bottom Discretionary Trades for the week

TICKER	ENTRY DATE/TIME		EXIT DATE/TIME		QTY	PURCHASE AMT	SOLD AMT	GAINS		TYPE

MALGM	2007-07-12-15-25-41	2007-07-13-10-12-18	9000	50600		80100		29334		OPTIONS (MA)
SGRGK	2007-07-13-10-17-52	2007-07-13-15-59-16	30300	68400		92150		23234		OPTIONS (SGR)
QHBGA	2007-07-09-10-26-37	2007-07-09-15-13-45	6000	61200		81832		20481		OPTIONS (FSLR)
RFYGD	2007-07-13-14-16-01	2007-07-13-15-22-51	5000	39000		50000		10904		OPTIONS (RIMM)
ALNY	2007-07-09-08-05-42	2007-07-09-11-03-52	5000	114781		125000		10197		SHORT   
-----------
CPWR	2007-07-11-10-06-01	2007-07-11-12-07-11	10000	97100		96300		-822		SHORT
APVGG	2007-07-10-12-51-26	2007-07-10-15-11-46	10000	23950		20500		-3620		OPTIONS (AAPL)
SCHN	2007-07-09-09-32-43	2007-07-09-10-18-07	1000	61079		57240		-3860		PRECONS 
VTAL	2007-07-11-09-26-07	2007-07-11-16-23-36	16000	320892		315562		-5404		SHORT
MALGN	2007-07-13-10-43-57	2007-07-13-13-55-43	10000	56920		39010		-18091		OPTIONS (MA)


                                        (Before Interest and Other charges)
                                        TRANSACTIONS ANALYSIS FROM 2007-02-25 TO 2007-07-14

                             Current Week                                    |	Since Inception of Thread
                                                                             |                                           
                Method          Gains/Loss       No Of          Profitable   |  Gains/Loss       No Of       Profitable  
                                                Trades              Trades   |                  Trades           Trades  
Automated       AutoTrade1           -2033           5                   2   |       34168         136               80  
                AutoTrade2             257           1                   1   |        3719           4                3  
                AutoTrade3           -1448           1                   0   |       -1448           1                0  
                                -----------     --------        ------------ |  -----------     ------       ------------
Total Automated                      -3224           7                   3   |       36439         141               83  
                                -----------     --------        ------------ |  -----------     ------       ------------
Discretionary   Long                  2063           4                   3   |      -55294         142               81  
                Short                 5631           6                   2   |       44145         137               84  
                Options(long)        66743           9                   7   |      120236          78               48  
                                -----------     --------        ------------ |  -----------     ------       ------------
Total Discretionary                  74438          19                  12   |      109087         357              213  
                                ===========     ========        ============ |  ===========     ======       ============
Net Totals                           71214          26                  15   |      145525         498              296  
                                ===========     ========        ============ |  ===========     ======       ============
 

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