Jan Natural Gas (NG) is close to 6, which makes the value of Jan 5.50 put worthless. Thus, I keep all the premium I wrote. The total profit of this trade is $3180 less commissions.
Since NG is rallying, I'm not able to do anything until NG drops somewhere around 5.5 again. If so, I'll sell 'Feb' NG put again.
Wednesday, December 24, 2008
Monday, December 22, 2008
Covered 1 Jan 170 put
Lumber rallied and my exit was filled at 0.9 (or $99 less commissions). My profit is 5.5 - 0.9 = 4.6 (or $506 less commissions). I'll sell 1 Mar 170 puts once I roll over my current position to the next expiration.
Friday, December 19, 2008
Natural Gas Update
NG Jan put I'm holding expires on Wed, 12/24/08. Currently, it's in the money, so I'll likely get assigned a long position from 5.5. I'll roll this over to Feb long on coming Fri or Mon. As soon as I roll it over, I'll try to sell Feb 6 Call for 310 creating a covered call. In order to do that, NG has to bounce close to 5.5 I think.
Futures puts are a bit different from stock options because they are skewed to long side as everybody knows NG won't be free, but can go high with unlimited.
The real question is if NG continues to drop, where do I want to scale-in. I'd like to sell a 4.5 Put, but I'm afraid I am not able to bring enough premium. 5.0 for $3000+ premium or 4.75 for $2000+ premium...
Remember the margin on NG is pretty high and things can move very quickly. I've seen where NG made $100K equivalent move.
Futures puts are a bit different from stock options because they are skewed to long side as everybody knows NG won't be free, but can go high with unlimited.
The real question is if NG continues to drop, where do I want to scale-in. I'd like to sell a 4.5 Put, but I'm afraid I am not able to bring enough premium. 5.0 for $3000+ premium or 4.75 for $2000+ premium...
Remember the margin on NG is pretty high and things can move very quickly. I've seen where NG made $100K equivalent move.
Monday, December 15, 2008
Day trading back-log
Last week, I had a business trip to California for a week. One nice thing about that was I was able to day-trade open and close totalling 4 horus / day. I took 8 trades and the results are as follows (all before commissions):
Mon, 12/9:
#1: -$300
#2: $50
Tue, 12/10:
#3: $50
#4: $187.5
#5: $187.5
Wed, 12/11:
#6: $175
Thu, 12/12:
#7: $175
Fri, 12/13:
#8: $187.5
------------
Total: +$682.5 (less 21 round contracts of commissions)
All were traded on 2 or 3 lots at a time with ES only. I don't know if this is sign of something. I still need to gather more live trading data for sure at least for one solid month.
Mon, 12/9:
#1: -$300
#2: $50
Tue, 12/10:
#3: $50
#4: $187.5
#5: $187.5
Wed, 12/11:
#6: $175
Thu, 12/12:
#7: $175
Fri, 12/13:
#8: $187.5
------------
Total: +$682.5 (less 21 round contracts of commissions)
All were traded on 2 or 3 lots at a time with ES only. I don't know if this is sign of something. I still need to gather more live trading data for sure at least for one solid month.
Tuesday, December 9, 2008
Friday, December 5, 2008
Sold 1 Jan Lumber 170 Put for 5.5 ($605)
This is another cost-avg for my lumber trade. This option expries the end of this month (Dec 2008) and if I do get assigned, I'll be holding 4 lots. Lumber is definitely a free fall, especially with housing markets. I'll continue to trade my plan. I'm prepared even if Lumber goes to zero (free lumber for everybody).
Thursday, December 4, 2008
Lumber
Lumber is approaching to 170 pretty quickly. I don't think any of people I know trade Lumber. I'm down quite a bit on this Lumber trade. Things just do not look good. I feel like I'm a newbie who is holding the losing trades forever. If I remember that feeling correctly, I felt better once I just sucked it up and took the loss. (Then watched the trade go my way, of course.)
Markets are going to do exactly what they want to do. They will keep doing it until most of people puke and give up everything. I'm trying real hard to remain calm, but it is very hard.
When I first got involved with Lumber, I thought it wouldn't go below 200 although it could. I guess I didn't fully accept the risk. Now I'm considering the ultimate risk level. What if Lumber goes to zero and what the risk is going to be. I still plan on selling puts every 40 pts or so. So 130, 90, 50, and 10. At that time, I'll be holding 8 lots. If Lumber is at 10, my open drawdown will be -$122,100 (excluding commissions including premiums written) with the avg of 148.75. Yikes, I can't even begin to imagine when Lumber becomes free!
The guy who taught me this method said once he was in Coffee trade for 2 years. (I'm holding my lumber for about a year). During that time, he advised this trade to others, but many just couldn't have enough patience. Even if one guy waited for 2 years, he got out at break-even.
Sure enough, Coffee went way beyond the avg price and the guy who taught me got out with $20K profit per contract. He's also in Lumber trade. His avg price is a lot higher than mine, but he seems calm.
At the same time, Natural Gas and Crude Oil are getting very interesting. I'd like to go long any time, but I'm not quite sure if we'll really go through worse than Great Depression. I personally don't think so (or don't want to believe because of Lumber. Yeah I'm biased!). I think Gov will do whatever they can. They don't care if we see Oil at $10000 or not, and they just want to get the heck out of this mess.
I'm just talking loud myself to see what I should do. Sometimes it helps talk out loud, right? What I should do is to stay calm and take advantage of what I'm seeing. Cotton, OJ, Crude, and Natural Gas all look great. I've been sitting on cash and I think I'll move all of them into my position trading account. This doesn't mean I'm going to buy 10 Nat Gas. I'll still approach conservatively, and trade as if they'll go to zero (a mistake learned from Lumber).
Markets are going to do exactly what they want to do. They will keep doing it until most of people puke and give up everything. I'm trying real hard to remain calm, but it is very hard.
When I first got involved with Lumber, I thought it wouldn't go below 200 although it could. I guess I didn't fully accept the risk. Now I'm considering the ultimate risk level. What if Lumber goes to zero and what the risk is going to be. I still plan on selling puts every 40 pts or so. So 130, 90, 50, and 10. At that time, I'll be holding 8 lots. If Lumber is at 10, my open drawdown will be -$122,100 (excluding commissions including premiums written) with the avg of 148.75. Yikes, I can't even begin to imagine when Lumber becomes free!
The guy who taught me this method said once he was in Coffee trade for 2 years. (I'm holding my lumber for about a year). During that time, he advised this trade to others, but many just couldn't have enough patience. Even if one guy waited for 2 years, he got out at break-even.
Sure enough, Coffee went way beyond the avg price and the guy who taught me got out with $20K profit per contract. He's also in Lumber trade. His avg price is a lot higher than mine, but he seems calm.
At the same time, Natural Gas and Crude Oil are getting very interesting. I'd like to go long any time, but I'm not quite sure if we'll really go through worse than Great Depression. I personally don't think so (or don't want to believe because of Lumber. Yeah I'm biased!). I think Gov will do whatever they can. They don't care if we see Oil at $10000 or not, and they just want to get the heck out of this mess.
I'm just talking loud myself to see what I should do. Sometimes it helps talk out loud, right? What I should do is to stay calm and take advantage of what I'm seeing. Cotton, OJ, Crude, and Natural Gas all look great. I've been sitting on cash and I think I'll move all of them into my position trading account. This doesn't mean I'm going to buy 10 Nat Gas. I'll still approach conservatively, and trade as if they'll go to zero (a mistake learned from Lumber).
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