NG trade recap - daily P/L

As usual, as soon as I got in, it started going against me and I didn't really see profits unlit the final day. When you sell options, you see a lot of premiums evaporate in the last few days.

Offset Dec NG 3.5 put

I sold 1 Dec NG futures contract at 3.462. If the price was around 3.5, I would have let ride and see where it's settled, but since I'm well within 3.5, I just sold 1 futures lot to offset my assignment. I didn't buy any Jan contract because there's a spread of 0.15 between Dec and Jan (carrying cost etc). The Jan contract is currently being traded at 3.6 or so. So I'll wait to sell 3.5 put if it drops. Since I didn't buy the Jan contract, we all know markets will just shot from here. If I was at loss, I would have rolled over without any choice.

All in all, my break-even point was 3.416, so my profit was $460 less commissions over 2 weeks. Not bad, but not so great either. Actually I was lucky that today's NG storage report came shorter than expected, but at one point NG was at 3.8, so I tried to exit my option at 0.3 or so to get $500+ profit, but usually floor traders make the options spread very wide on the expiration date to screw some dumb people, so I couldn't do it.

For some reason, many people are scared of getting assigned and brokers are so careful about it. I'll post again once I have a final settlement. As a matter of fact, I'm not 100% happy with ThinkOrSwim due to the following:

-You have to pay commissions to get assigned for futures. I understand for equities, it's a PIA process, but futures, there shouldn't be any assignment fee like RJO or tradestation.

-They don't let me trade on an expiration date. There are times I don't know if I get assigned or not, so I want to wait until the next day of an options expiration day, which is a futures expiration day for NG. I have no choice but to trade overnight while bid/ask is widen to offset my position.

Dec NG options expiration day plan

It seems I will likely get assigned on my Natural Gas Dec 3.5 put. Normally, futures contracts expire the day after options expiration, but due to Thanksgiving holidays, the Dec contract expires on Mon, 11/28.

I have a few options.

-If the futures contract closes above 3.5, I don't have to do anything (the least likely case considering where markets are traded at right now).

-If the futures contract closes around 3.5 (not likely happen either), but not sure if I get assigned or not. In this case, I need to see a settlement price and if I get assigned, I'll sell the Dec futures and buy Jan futures outright.

-If it closes below 3.5, I'll sell the Dec futures and buy the Jan as quickly as possible.

Since markets are still open after the pit session closes (1:30 pm CT), I can wait to roll over later. Furthermore since electronic markets open during Thanksgiving holidays, I don't have to roll over today, or even wait until Mon 11/28, the futures expiration day. However ThinkOrSwim says any assigned contract gets liquidated 'any time' during the expiration day, so I want to make sure I don't get liquidated by someone else except me because if I do and markets shoot up until I roll over, I might miss any move.

My break-even point based on Dec contract is 3.416 (3.5 - 0.084 (the premium I sold for) = 3.416). If I have a few hundreds dollars of profit, I may simply exit the trade (meaning offset the Dec NG, but not buying Jan) and I start over by selling Jan put.

Now the twist of this whole thing is due to Thanksgiving, we have Nat gas report coming out today (usually Thursday), so it might be good or bad for me. Shortage usually makes NG go higher but not necessary. The weather has been pretty mild so far, but I'm betting on an old saying the hotter the summer gets, the colder the winter gets. It was one of the hottest in the last 10 years.

I'll update regardless what happens.

Personality

I've been trading for a few years, but I don't think my mindset is set right to be a good trader. Every time I enter, 'Ok, just trade my plan and don't get emotional about tick-by-tick action.' Yet, I still suck at managing my emotion.

I sold NG put a few days ago. As soon as I entered it started going against me. First day, no big deal, I have a plan if it goes down or up. But what I really wanted to happen was that NG goes up and my put goes worthless immediately to get the full premium. The 2nd day, it kept going down and I didn't like it. I started checking NG quote like every 30 mins even if this is a long term trade like a novice trader.

Fast forward to yesterday, NG news came out with smaller storage than expected, so it shot up. I got excited, but shortly after it started going down again. I'm thinking now, I get so excited and discouraged on tick by tick action.

I know I'm not overtrading for sure, so I just really need to sit back and relax IF I really want to be a good trader.

Sold 1 Dec NG 3.5 Put for 0.84 ($840)

I've been waiting for this level. I finally pull the trigger on the following:

Sold 1 Dec NG 3.5 Put for 0.84 ($840) less commissions

About 9 days till expiration, it's currently slightly in the money. I like the fact that NG is beaten down a lot with no sign of any support (isn't it contrary to selling puts??). I plan on selling if it gets to 3.25 and 3 level as well. Margin on full size NG is pretty low compared to a few years ago, so that helps.

I'm willing to get assigned and if so, I'll try to roll over to the next month and sell calls right away (covered call). I'm not trying to make a fortune here. I'll try to make about $1-2K.

Gold - platinum spread recap

It was an interesting trade. The last trade I did before this one was probably in early 2010. I completely stopped trading once I started building my house.

About 1.5-year after, I almost forgot what it's like to trade. The first problem I had was that I had a very very hard time pulling the trigger. Even if my brain tells me there'll be drawdowns, stopouts, risks etc, but I was still afraid to lose money. Am I overtrading? No, I don't think so. When I was trading nat gas, I was okay with 10K swing under 150K portfolio.

I figured I think I just have to pull the trigger. Setups were good. When the spread was +20, it was a good price, but I thought I should wait longer until it becomes 0 and I waited very patiently. I knew I'd likely get profits when gold starts heading down, and lose money if gold keeps going higher and the spread gets wider in inverse. I was prepared to add more if the spread becomes -50 (-$5000) although I wanted to work this trading out as soon as possible. Don't we all traders want markets to come to get filled in, but as soon as we're filled, we want it to turn and goes into our favor? Wait, a few seconds ago, you want it to come one way, but now you suddenly want it to go to a completely different direction? We, traders, are so demanding. ha

The very first day, I was -$1000. Oh great, it's going to be another natural gas trade, which took about 11 months. But the next day, gold tanked as I was hoping, which gave me, at one point, $2K profit. On that day, I was just checking a delayed quote since this is a long term trade, but I thought I should hold it until $5-10K profit, where greed kicked in. I should have realized that was the first exit sign.

The next day, all the profits were wiped out and I'm sitting at about b/e. I was kicking myself thinking 'What have I done'. 2K is good money. You probably guessed what's coming. Gold started rallying and the spread went into -20 which means I'm -$2000 instead of +$2000. I really started thinking shoulda, coulda, woulda....

What was interesting was gold did make a new high, but quickly turned around. At this point, I was thinking, hmmm this maybe a typical top pattern (invereted V). It runs stops and let's head down until all the novice bull traders give up, so I thought I'd have a good chance still and it indeed started heading down. However what was frustrating was even if gold went down, the spread didn't go down as much as I expected (platinum was going down as much as gold instead of holding the value), which probably means there are still a lot of people buying gold, but not platinum.

The spread came back to break even around 9/12, and I was just so attempted to exit everything. We've all felt that if trades go against us and come back to break-even, we want to exit! Now if gold starts heading to 2000, it won't be pretty. At this point, I decided to change my plan a bit. I didn't exit because I keep telling myself, I just risked this much money and I'm not here to exit at b/e. Anyway, the new plan is I'm going to take out profits at about +10 ($1000) and enter again if it goes to -20 or so. I figured if I can do this a few times, it'd be a lot better than trying to catch a big move.

On 9/15, Gold went below a recent swing low, which triggered some stops and it started bouncing off the low, so I figured that was my exit signal.

All in all, after all the commissions, it was $885.18 trade, but it taught a lot about trading again. In my next blog, I'll talk about what I'm looking at.

Exited Gold - Platinum spread

Today I exited the gold-platinum spread as follows:

Sold 2 platinum at 1791.1
Bought 1 gold at 1783.3
with a spread of 7.8

This gave me a profit of the spread of 9.3 or $930 (less commissions)

I'll write separately about how this turned out.