Sunday, September 4, 2011

मोवेद फ्रॉम ओएक्स ओप्तिओंस तो स्त्रैघ्त BUYING

I´m no longer trading OEX OPTIONS. I am trading the QQQ, which is the NASDAQ index. Reason, the bets are smaller to start. Around $100 to $400.

This is the link. Not sure why I can´t change the title in the link, because my BLOG is actually titled, THE SIMPLE ONE OPTION WINNING TRADING METHOD. You will find a report on my progress there. Looks lite the Chinese are screwing around with my title in English.

I went from paper trading into CASH money but ended up losing a substantial part of my account on the first bet, using a MARKET ORDER instead of a LIMIT ORDER. I got screwed over badly. Now I´m trying to get the account back up. Since then, after losing on GAP TRADING, I have done LONG STRADDLES in cash, and it works, but is way too slow, and way too little money to make back my lost money. Since I need CASH returns, higher risk is acceptable. I´m trading straight buying options. You have to know your market moves though. Spent two months devising a system, and currently have it working. The report is on the BLOG above.

Wednesday, June 8, 2011

Update June, 2011, on OPTION TRADING.


Last year we gave up on paper money, trading credit spreads. We got wiped out twice on steep corrections. Credit Spreads depend on compounding, but when you get wiped out by an excessive market movement of 2% to 5%, the compounding of your capital suddenly means you get mostly wiped out.

From December through March into 2011, I went to paper trading, a compounding system using the OPENING GAP, on a once a month trade and had a return of 297% in four months. With that I talked my brother in law, in putting in $5000 and I put in $5000 for a CASH ACCOUNT of $10,000. Then I went into trading the method with CASH MONEY in real time. Turned into a disaster.
Won the first trade, then lost three trades. I went from up 5% in the account, to a loss of 30% in the account, where I sit right now. My brother-in-law has since withdrawn his money and taken his loss. I´m still in the game.
The reason it didn´t work from switching from paper money trading, to real money trading was the FILLS. In trading with real money, the opening move was to place a PRE CALCULATED MARKET ORDER, BASED on using a standard FREE OPTION CALCULATOR. While in paper money trading, the fills were mid point, and over generous, in REAL MONEY trading, the market makers turned out ruthless. They would take a MARKET ORDER and run it up, way past. Since I would be compounding, I would bet the maximum possible. It might work still, by using a LIMIT ORDER, to ENTER, the OPENING GAP TRADE, and the worst that can happen I figure is to be jumped over and have to cancell the order. Unfortunately, I am down 30% of my CASH ACCOUNT and cannot at this time take that risk anymore.

So I´ve switched to paper money testing some other trading ideas and am currently paper trading SWING TRADING based on the HIGH and LOW of the weekly bar. Trying to make one trade per week for maximum gain. Due to the restriction on under capitalized accounts and the EXCHANGE RULES controlling the number of trades you can make. Day trading not allowed. It is early days yet, but this first week of a SWING LOW system for the weekly bar, seems to be working. I´ll run it experimentally paper trading, to the end of June, 2011 before deciding to try it in my CASH ACCOUNT. This time around, I´m using ONLY LIMIT ORDERS. I´ve also limited my bets to just two option contracts between $2 and $3 for the premiums.
I´ve also switched to the SPY index, because of the narrower spread and even so, I´m entering my LIMIT ORDERS around 5 cents under the quoted BID price and waiting for it to get filled.

Monday, September 27, 2010

Moved from here to OEX WEEKLY OPTIONS

I've moved our trade history and record and activities over to ELITE TRADER.

Currently using OEX WEEKLY OPTIONS

We were on SPX Credit Spread Trader for a while in the ELITE TRADER forums, but eventually moved from there to OEX WEEKLY OPTIONS for debating, reporting and educational purposes.

If you wish to follow our option trading education and success or failure, follow it here.

Friday, May 21, 2010


Report #32
JUNE OPTION MONTH STARTING 21ST OF MAY TO JUNE 18 TH ( Third Monday of May, to third Friday of June month )

TRADES: Goal is to duplicate the success of May with 16 trades entered and won. It has taken 10 months to get to this point in the evolving trading methodology. This is the June Trading Month as we go along.

Number of trades to date: 4 ---- June 1st ---

Number of winning trades: 0

Number of trades exited at breakeven: 2

Number of losing trades: 0

Open trades pending working: 2

Percentage of total annual wins to losing trades: 100%

Return on GROSS ACCOUNT CAPITAL is running between 3% and a little over 5% per month. Individual trade returns vary slightly.

Trade 1 with ThinkorSwim: 1 Long Call Aug 490 @ 26.30 May 27th OEX 494.52
( Trade 1 exited at breakeven one week later ) Failed to get timing right.
Trade 2 with Option House: 1 Long Call Aug 490 @ 26.65 May 28th OEX 495
( Trade 2 exited at breakeven one week later ) Failed to get timing right.
Trade 3 with Thinkorswim an IRON CONDOR
a) * 10 - 510/510 Bear Calls at .50 cents Vertical Spread -- OEX 493.75
b) * 10 - 480/475 Bull Puts at .65 cents Vertical Spread __ " ___


Friday, May 7, 2010

Report #31, Trades status TEST SPREADS


MAY 21st., 2010 May Expiration Friday for options.

Number of trades to date: 16

Number of winning trades: 16

Number of losing trades: 0

Open trades pending working: 0

Percentage of wins to losing trades: 100%


I was looking for the lowest risk trading system possible. In ten months, we have tried numerous things and discarded anything that had regular losing trades as part of the methodology.
What is the actual risk I am not yet sure? We haven’t lost anything yet.
Some statistics can be extrapolated from trading so far:

1) The trading method is earning an average of 4% on invested capital / per month.
2) That means $10,000 will earn $ 400 gross profit return per month on average.
3) Dependent on the size of your account, you can judge whether you will have enough money on a monthly basis to use as an income flow.
4) This is gross income, and I have not yet found an accurate figure for income tax payments. But these seem to be between 28% and 30% per year off the gross income.
5) Annual income would be on average, 48% per year of capital invested. Income tax would reduce this to a gross income of 48% per year, to a net income FLOW OF 33.6% of capital invested, return on capital.
6) There are several things involved in RISK MANAGEMENT. To get the lowest RISK PROFILE, the available account capital to trade on a per month basis is divided into 8 trades. This is called diversification. The individual return on capital per each trade varies, dependent on the part of the month the trade is implemented. More diversification of trades can lower the 4% gross return on capital invested somewhat. Concentration of trades into fewer choices increases the profit profile but increases RISK. Some months; the opportunities only allow 6 trades, leaving some account money unused for that month with which to trade. This lowers the return slightly.
7) INCREASING THE PROFIT monthly profile, requires changing the risk profile and increasing RISK.
8) There are two ways to increase the PROFIT PROFILE. The first is to consolidate the 8 diversification trades into only 3 trades per month and place these at the early part of the monthly trading strategy, when the premium gap is largest. You can get increased profit return, over 5% per trade this way. This of course increases your risk of loss from concentration.
9) The other way is to increase your number of contracts traded on a per trade basis. Or more selectively throughout the month. We are working on this study.
10) It would seem that $250,000 would be a comfortable trading account to work with? The particular market I am trading, which is the OEX CASH INDEX is very liquid and can absorb this amount and the gross return would be $10,000 per month. Or $120,000 per year, GROSS.
11) For larger amounts of money, you would have to go into parallel cash indexes, or stock screening and run a number of parallel operations at the same time.
12) This cash machine utilizes ALL your capital each month. It is a monthly / weekly trading system.

Friday, April 30, 2010

Option House spread trading ELIMINATION STRATEGY account trials. May 1ST, 2010. ( Report #30 )


Starting balance: hypothetical $20,000, paper trading virtual platform. ( started roughly middle first half of month ? )


Trade 1 :May 4th, 2010 ( MONTHLY trade May) OPTION HOUSE BROKERAGE
10 contracts - Sell OEX 560/Buy 565 strikes @ .30 cents spread
Order I.D. 251 49211
+$300 credit, expenses $22.50 (commission + fee )
SPREAD IS WORKING TOWARD EXPIRATION ON MAY 22ND. Basically the bet is that the trend is down, for next two weeks or so.
-- WIN--

10 oex 540/545 CALLS @ .20 cents limit order FILLED
+$200 - $40 commissions

Net profit: $ 160---- WIN -----

Trade 2
SELL 10 oex 550 Calls, Buy 10 OEX 555 Calls for spread of .30 cents.
( credit $300 - $22.50 commissions and fees )
---WIN --- Expires Dec. 22nd.

**** I just noticed that ThinkorSwim costs per trade are double that of Option House! In the above case; Option House does not offer WEEKLY EXPIRATIONS, so there is no choice. Unless it is the 4 th weekly, which overlaps the last week of option period ( 3rd Friday ending of Month )

Trade 3 Weekly - Option House ( LAST WEEK OF OPTION TRADING MONTH( expiration is third Friday of May ) Monday first hour trade.
seel 12 535 Calls/Buy 540 Calls @ limit order .25 cents + $300 - $24.50 costs
= +$275.50 --- WIN ---

Trade 2 for thinkorswim brokerage Monday a.m. trade.

WEEKLY sell 10 535/540 CALLS Limit order was for .25 cents, but they executed at a .30 cents spread. $300 - $70 costs = +$280
--- WIN --- _________________________________

Trade 1 Experimental PUT - Paper Trading straight 1 PUT BUY August 520, @$30,80
Trying to see what 10 OEX points would bring, on a safer 3 month out option. You need more index point moves to get dollar moves, for less TIME DECAY trade off.
+$370 WIN ( OEX moved 10 points on a 1 PUT August $3080 trade for a gain of + $370 Net after commissions.WIN

Monday, April 26, 2010


Report # 29


I'm eliminating all other trading right now and concentrating on Credit Spreads. Am also concentrating on only one BROKER, which is THINKORSWIM, as they give the detail and capability needed for trading both MONTHLY AND WEEKLY SPREADS.
a) Option House account has been raised to $20,000 for monthly spread trading, except possibly for a position directional trade in sure thing type trend starts, when the volatility is high. Though for a LOSS FREE trading system, money earner, I think I'm going to have to eliminate the taking of any position directional trades?
b) Position trading, based on market direction guessing has been terminated with my THINKORSWIM account, since that loss last week on a directional trade. There were too many losses. It works, but the results were not consistant enough. One position directional trade loss can wipe out all the accumulation of months of small steady incremental profits from spread trading, small as they are. It is more important in my mind, not to EVER have a losing trade.

My goal is as far as possible a LOSS FREE trading system. I realize this is not totally possible, but as close to it as I can get, is the goal.

For this reason, I'm concentrating on Vertical Credit Spreads, IRON Condors and IRON Butterflys. I have not even started to try, or study Butterflys yet. These three systems are CREDIT SPREAD strategy systems.


MONTHLY Expiring third Friday in May/ 2010

1) Vertical Call Bear Spread 5 OEX 565/570 Calls @ .50 cents + $225 --results pending - trade working

2) Vertical Call Bear Spread 5 OEX 570/575 Calls @ .55 cents+ $250 --- results pending - trade working

WEEKLY EXPIRATION April 26 - 30th/2010

1) Vertical Call Bear Spread 5 OEX 560 Call/ 565 @ .45 cents + $200 --- WIN
2) WEEKLY TRADE - THINKORSWIM This trade was made on Wednesday morning. I attempted to put a limit order, at .10 cents, but got a FILL at .05 cents. I don't know why?
(2) Vertical Call Bear Spread 20 OEX 550/555 Calls at .05 cents Wednesday trade expiring on Friday evening. At only a (+ $100) I''m not sure what the brokerage fees and commissions will do to this? The 5 cents is too little.-- WIN! ---
Net profit: $100 - $70 commission = $30.

I do have plans to POSITION TRADE, but only when a NEW TREND starts, at the point of highest VOLATILITY. When the meat is in the trend position trading, in the first third of the trend BEFORE volatility drops off and it no longer is practical. There are only 6 to 8 trends a year, so there are not many high quality trades otherwise, that more or less guarantee winning. That's the theory anyway. We shall see how it works out in practice.


I'm studying on how much margin would be required to do a steady set of staggered, or overlapping Vertical Credit Spreads. One 5 contract Vertical Credit Spread requires $2500 in margin. So it looks like in one month, I might like to do up to 8 Vertical Credit Spreads. That would mean an account size of $20,000. If I can get a local faster internet service provider. In the meantime, will continue the practice and learning process using ThinkorSwim funny paper money account for another 6 weeks or so.