3 losses in a row ... trying an alternative plan

It wasn't a flat week for the SPX, not by half:

I was short the 2890 calls for the Monday and Wednesday expirations ... bad news as the close was at around 2905 Monday and 2915 or so on Wednesday. That's losses of X and Y ...

I've been using a different system with a couple of smaller accounts: going further out in time and just taking a fraction of the credit instead of holding to expiration. I'm going to try something similar in a (somewhat) larger account ...

If we go out to 21 DTE (Days to Expiration) and sell an iron condor 3 times per week ... then the return taking 1/2 the credit is about the same as holding to expiration for the 4-5 day expirations we have been using.

But look how much wider we can go, especially to the downside:

• 5 DTE: short the 2865 put
• 21 DTE: short the 2780 put

Tastytrade research finds that to get half the credit, you (on average) have to wait half the time. So putting multiple ones of these on, every 2 days, you start to close them for the profit in 10 days and therefore (on average) every 2 days from then on.

If you aren't showing a profit (or a full profit) after 10 days, close it anyway and move on. You'll have other profitable trades surrounding it ...

Here's the existing results ... losing string was broken today ...

Expiration	Underlying	Long put	Short put	Short call	Long call	Credit Received	Result
07/16/2018/	SPX	2680	2730	2810	2860	$3.60	Won 100%
07/18/2018/	SPX	2700	2750	2820	2870	$3.95	Won 100%
07/20/2018/	SPX	2700	2750	2835	2885	$2.40	Won 100%
07/20/2018 (a.m.)/	NDX	7260	7310	7410	7460	$5.99	Won 100%
07/25/2018	SPX	2705	2755	2835	2885	$2.40	lost 16% of amount at risk
07/27/2018	SPX	2695	2745	2825	2875	$3.50	Won 100%
07/30/2018	SPX	2720	2770	2850	2900	$2.60	Won 100%
08/01/2018	SPX	2730	2780	2870	2920	$2.15	Won 100%
08/03/2018	CMG	430	450	490	510	$1.01	Won 100%
08/03/2018	AMZN	1692.5	1722.5	1887.5	1917.5	$2.60	Won 100%
08/06/2018	SPX	2720	2770	2860	2910	$2.05	Won 100%
08/08/2018	SPX	2740	2790	2860	2910	$2.05	Won 100%
08/10/2018	RUT	1610	1640	1710	1740	$1.53	Won 100%
08/10/2018	AMZN	1737.50	1767.50	1885	1915	$1.79	Lost about 30%
08/13/2018	SPX	2760	2810	2885	2935	$1.65	Won
08/15/2018	SPX	2760	2810	2860	2910	$3.80	Won
08/17/2018 (a.m.)	NDX	7310	7360	7460	7510	$4.42	Lost 7.07%
08/22/2018	SPX	2720	2770	2860	2910	$3.95	Won 70% of possible
08/24/2018	SPX	2745	2795	2880	2930	$3.30	Won 100%
08/24/2018	RUT	1600	1650	1715	1765	$2.16	Lost 17.7%
08/27/2018	SPX	2760	2810	2890	2940	$2.45	Lost 23%
08/29/2018	SPX	2770	2820	2890	2940	$2.95	Lost 47%
08/31/2018	SPX	2795	2845	2925	2975	$2.55	Won 100%

That's 17 for 22: 77.97% ...

Relentlessly straight up market hurts results ...

Our trading plan is neutral, meaning it pays off if the underlying instrument stays within a specified range for the days the trade is active.

The past ten days, though,  it went up just about too much to handle:

The Russell 2000 was similar but even worse, going up even faster at the wrong time:

My question becomes: is this anomalously ridiculously too much can't last, or do I need to change my strategy to take advantage of it?

One thing I've been doing consistently (though not with the RUT trade that lost 17% this past week) is move the short call strike in ... but only while the market is running within a few points of its record high. For example, I had it at the 2860 strike for last Wednesday's expiration, and this just barely worked as the market closed at 2861 and change and I had sold the spread for $3.95 ... so the profit was cut to about 70% of what it would have been ... or within striking distance of what it would have been if I'd just sold the spread out wider on the call side and gotten maybe $2.00 on it ...

Here's to a flatter week this coming week:

Results now 15 wins, 4 losses (78.9% wins ... probably not good enough if this continues) ... details to follow:

Expiration	Underlying	Long put	Short put	Short call	Long call	Credit Received	Result
07/16/2018/	SPX	2680	2730	2810	2860	$3.60	Won 100%
07/18/2018/	SPX	2700	2750	2820	2870	$3.95	Won 100%
07/20/2018/	SPX	2700	2750	2835	2885	$2.40	Won 100%
07/20/2018 (a.m.)/	NDX	7260	7310	7410	7460	$5.99	Won 100%
07/25/2018	SPX	2705	2755	2835	2885	$2.40	lost 16% of amount at risk
07/27/2018	SPX	2695	2745	2825	2875	$3.50	Won 100%
07/30/2018	SPX	2720	2770	2850	2900	$2.60	Won 100%
08/01/2018	SPX	2730	2780	2870	2920	$2.15	Won 100%
08/03/2018	CMG	430	450	490	510	$1.01	Won 100%
08/03/2018	AMZN	1692.5	1722.5	1887.5	1917.5	$2.60	Won 100%
08/06/2018	SPX	2720	2770	2860	2910	$2.05	Won 100%
08/08/2018	SPX	2740	2790	2860	2910	$2.05	Won 100%
08/10/2018	RUT	1610	1640	1710	1740	$1.53	Won 100%
08/10/2018	AMZN	1737.50	1767.50	1885	1915	$1.79	Lost about 30%
08/13/2018	SPX	2760	2810	2885	2935	$1.65	Won
08/15/2018	SPX	2760	2810	2860	2910	$3.80	Won
08/17/2018 (a.m.)	NDX	7310	7360	7460	7510	$4.42	Lost 7.07%
08/22/2018	SPX	2720	2770	2860	2910	$3.95	Won 70% of possible
08/24/2018	SPX	2745	2795	2880	2930	$3.30	Won 100%
08/24/2018	RUT	1600	1650	1715	1765	$2.16	Lost 17.7%

NDX trade finally loses .. but not much! (Yay for wide strikes!)

This past week was "expiration week" when monthly options expire. As previously mentioned here, that's now the once per month that the NDX trade that works so often (1 standard deviation iron condor put on around 9:45 a.m. to 10 a.m. Pacific time Thursday, expiring the next morning) is only available now once per month during these "expiration weeks."

As you can see, it went sharply down just after I put it on ... and the price of daily settlement, NDS, which is how the result is marked, came in at 7352.30. Since the short strikes I sold were 7360, that was a loss.

But! Once again the widened strikes limit the loss ... 5 wide strikes would have lost 100%, but 50-wide strikes only lost ... 7.07%! A couple of smaller accounts I'm trading were only at 30 wide strikes, and those were slightly higher percentage losers: 12.9%.

Since the 2 SPX trades made full profit, the week was profitable too. I made $377.68 in the $20000 account I'm trading, $3776.80 in your virtual $200,000 account.

I'm going to start mentioning the virtual $200,000 account because I'm going to be looking for 10 people with $200,000 to allow me to try this system with their accounts.  I just passed the "series 65" test 2 weeks ago and am working on the other requirements to become a Registered Investment Adviser in Washington State (and maybe others later) ... so I'll be able to do this for more people soon, I think.

Contact me if you're interested .... Results after this week:

Expiration	Underlying	Long put	Short put	Short call	Long call	Credit Received	Result
07/16/2018/	SPX	2680	2730	2810	2860	$3.60	Won 100%
07/18/2018/	SPX	2700	2750	2820	2870	$3.95	Won 100%
07/20/2018/	SPX	2700	2750	2835	2885	$2.40	Won 100%
07/20/2018 (a.m.)/	NDX	7260	7310	7410	7460	$5.99	Won 100%
07/25/2018	SPX	2705	2755	2835	2885	$2.40	lost 16% of amount at risk
07/27/2018	SPX	2695	2745	2825	2875	$3.50	Won 100%
07/30/2018	SPX	2720	2770	2850	2900	$2.60	Won 100%
08/01/2018	SPX	2730	2780	2870	2920	$2.15	Won 100%
08/03/2018	CMG	430	450	490	510	$1.01	Won 100%
08/03/2018	AMZN	1692.5	1722.5	1887.5	1917.5	$2.60	Won 100%
08/06/2018	SPX	2720	2770	2860	2910	$2.05	Won 100%
08/08/2018	SPX	2740	2790	2860	2910	$2.05	Won 100%
08/10/2018	RUT	1610	1640	1710	1740	$1.53	Won 100%
08/10/2018	AMZN	1737.50	1767.50	1885	1915	$1.79	Lost about 30%
08/13/2018	SPX	2760	2810	2885	2935	$1.65	Won 100%
08/15/2018	SPX	2760	2810	2860	2910	$3.80	Won 100%
08/17/2018 (a.m.)	NDX	7310	7360	7460	7510	$4.42	Lost 7.07%

A mixed week: nearly broke even but AMZN shows why cash-settled indices are better trading vehicles

I was short the 2860 SPX calls for Wednesday expiration, and was so pleased by its late move out of the money I took a screen shot to commemorate:

But AMZN wasn't so cooperative this week:

I was short the 1885 calls, and it looked bad enough on Thursday that it might go to 100% loss, up 30 points from the 1885 level. But it came down nicely and closed just in the money: 1886.30. Since I got $1.79 credit for the spread, that would have yielded a small profit, right?

Wrong! Unlike a cash-settled index (a lesson I learned in TSLA months ago on ThinkOrSwim), you just are on the hook for being short 100 shares of whatever stock you're trading against (per contract!)  ... in this case 1 contract = 100 shares x 1885 or $188500 I'd have to sell short and then buy back at whatever price I could stand. Most brokerages these days will close out the offending short strike before this happens.

So one can't just let it go to expiration and work it out from there as one can with cash-settled indices. I actually closed out the short 1885 calls earlier in the morning when the price had fallen to $1891 or so ... I couldn't see it necessarily falling further from there so just decided to close at that point.

Harrumph. Not as bad as working in one of their "fulfillment centers":

Anyway, with today's down move I got $3.80 credit on the Wednesday-expiring SPX trade, which had yielded only $2.50 last week.

I'm going to wait and see for Monday, but probably will just use SPX for the Monday to Friday trade ... for one thing it's "expiration week" next week meaning that the Fabulous NDX trade is available again so need to leave space for that one.

The trades so far:

Expiration	Underlying	Long put	Short put	Short call	Long call	Credit Received	Result
07/16/2018/	SPX	2680	2730	2810	2860	$3.60	Won 100%
07/18/2018/	SPX	2700	2750	2820	2870	$3.95	Won 100%
07/20/2018/	SPX	2700	2750	2835	2885	$2.40	Won 100%
07/20/2018 (a.m.)/	NDX	7260	7310	7410	7460	$5.99	Won 100%
07/25/2018	SPX	2705	2755	2835	2885	$2.40	lost 16% of amount at risk
07/27/2018	SPX	2695	2745	2825	2875	$3.50	Won 100%
07/30/2018	SPX	2720	2770	2850	2900	$2.60	Won 100%
08/01/2018	SPX	2730	2780	2870	2920	$2.15	Won 100%
08/03/2018	CMG	430	450	490	510	$1.01	Won 100%
08/03/2018	AMZN	1692.5	1722.5	1887.5	1917.5	$2.60	Won 100%
08/06/2018	SPX	2720	2770	2860	2910	$2.05	Won 100%
08/08/2018	SPX	2740	2790	2860	2910	$2.05	Won 100%
08/10/2018	RUT	1610	1640	1710	1740	$1.53	Won 100%
08/10/2018	AMZN	1737.50	1767.50	1885	1915	$1.79	Lost about 30%

That's 12 for 14 winners so far: 85.7% winners.

More next week ...

Near miss by falling burrito; Technical analysis update

I went to CMG this past week to get more credit, and just after I put on this trade:

A Chipotle outside Columbus Ohio on Monday 7/30/2018

I had sold the 450 put and bought a 430 put to limit the risk on that side to $20 (minus the credit I received: 98 cents) ... By the time I looked at it Monday morning, the stock was down to $429 (i.e. total loss) ....

But (a) no smoking gun was found and the store was reopened the next day, and CMG stock recovered all the way back, almost:

I think I'm going to stop trading CMG and TSLA and stick with AMZN only for an equity in this 4-5 day timeframe. Both CMG and TSLA have been periodically (and not just during earnings!) prone to these violent moves, CMG from perceived pathogens and TSLA depending on Elon Musk's latest tweet ... and the perceived safety or lack thereof in its cars.

AMZN controls the world ... or at least is so much more a diverse and huge company than either of these other two,  so it should be less vulnerable to this sort of move (IMHO) ... GOOGL is a possibility for this reason also.

And if I want to stick strictly with indexes, I can always use RUT and/or NDX ... both are slightly more volatile (i.e. they pay better!) than SPX. The SPX advantage is its 3 expirations per week ...

Technical Analysis Update

I read a couple of books after my TAC (Technical Analyst Colleague) predicted a Wednesday close almost exactly on the money 10 days ago. But I've concluded that while technical analysis may be valuable for some (including TAC), I don't think it's for me.

I closely read this book:

This guy is a fundamental analyst who reads a lot of newspapers ... I don't do fundamental analysis but I do like newspapers! So this rang a bell with me.

His take on Technical Analysis: Fuhgetaboutit ... gives numerous of examples of public predictions of TA practitioners not working.

Overall: a good book and very enjoyable to read.

Another book I merely skimmed so admit I may have missed something:

The author goes through a lot of space giving the scientific method and statistics and whatnot, all of which I was familiar with coming in and so just flipped through at high speed. 

His conclusion (also read at high speed so may have missed something) was that the only real evidence he could cite was the head-and-shoulders pattern 

... does work for trading futures, but he couldn't cite anything else that was proven to work.

All that being said, I do see traders that swear by TA and are apparently making money using it. So how is this possible?

One possibility is that the best of them have such experience in the markets and looking at the charts that they intuitively see what's coming and where to draw the channel lines, etc. Tim Knight is an example of this kind. In his Tastytrade show Last Call he spends 15 minutes on charts and apparently does well trading this way. But seeing where to put every stop isn't (apparently) one can program ...

Best of luck to all technicians out there, including my colleague TAC, but I think I can win without being a technician myself.

Results chart after this week's trades:

Expiration	Underlying	Long put	Short put	Short call	Long call	Credit Received	Result
07/16/2018/	SPX	2680	2730	2810	2860	$3.60	Won 100%
07/18/2018/	SPX	2700	2750	2820	2870	$3.95	Won 100%
07/20/2018/	SPX	2700	2750	2835	2885	$2.40	Won 100%
07/20/2018 (a.m.)/	NDX	7260	7310	7410	7460	$5.99	Won 100%
07/25/2018	SPX	2705	2755	2835	2885	$2.40	lost 16% of amount at risk
07/27/2018	SPX	2695	2745	2825	2875	$3.50	Won 100%
07/30/2018	SPX	2720	2770	2850	2900	$2.60	Won 100%
08/01/2018	SPX	2730	2780	2870	2920	$2.15	Won 100%
08/03/2018	CMG	430	450	490	510	$1.01	Won 100%
08/03/2018	AMZN	1692.5	1722.5	1887.5	1917.5	$2.60	Won 100%

9 for 10 winners (90%) and the loser only lost 16% ... may present trends continue! More next week ...