Friday, February 26, 2010

Useful charts for the OEX TRADER # 7

FREE ON THE WEB CHARTS I FOUND SCROUNGING AROUND # 7 report



This is a TICK CHART that first loads as a 3 week chart over years. If you wait, it will then load a 5 day real time chart. A bit delayed due to it being 8 minute averages.
____________________________________

http://www.livecharts.co.uk/trinframe.htm
http://www.quote.com/beta/chart.action?s=$TICK
There are two charts here, live during the market day with delayed VIX and TRIN
_____________________________________

http://www.marketvolume.com/quotes/trin.asp?s=OEX
http://
Not so much a chart, as END OF DAY TRIN numbers. I use the number for end of day analysis, making my decision for the next day. Lot of links on here, to other interesting trading information.
_____________________________________

http://finance.yahoo.com/q/bc?s=^VIX&t=5d&l=on&z=m&q=l&c=

http://

This is a bigger, 5 day VIX CHART
_____________________________________

http://www.marketvolume.com/quotes/technical_analysis_volatility.asp?s=OEX
http://

This information is used to give you the TR, or TRUE RANGE so you can know whether it is worthwhile trading or not in the number of OEX index points the next day will move for the daily range.
There is also the 9 Day Average, the 14 Day Average and the 21 Day Average you can use to calculate moving averages, to see if the TRIN is going to give you a clue to whether the next day will move UP, or DOWN. Between the TRIN and the TR, or ATR, you can figure whether it is worth your while to make a trade for the next day, or end of this day.
__________________________________________

http://bigcharts.marketwatch.com/advchart/frames/frames.asp?symb=OEX&time=&freq=

Big Charts is the best charts I have found and you can do the OEX and stocks with different time frames, including a good basket of computer indicators to use with them.
-------------------------------

OEX OPTION TRADING ACCOUNT UPDATE #6, NOT SO GOOD in January!

POST NUMBER #6

It was easier making money last FALL, when the market was in a BULL TREND and cycling fairly regularly. Now the trend has changed, I'm not doing good at all and negative with losses in my VIRTUAL ACCOUNT by January and still experimenting.
By March I had pretty much got my system of trading down. Still experimenting a bit, but by the third week of March starting to see improvements and gains in my Virtual Trading account with the broker. To move into cash, I need to break even at $5000 balance and then increase that $5000 to $7500, or a 50% gain and then I'll move into CASH REAL MONEY. A performance based training/learning experimental process. Essentially you have to identify ( I think ) your trading comfort style zone, then learn it like learning to play a musical instrument like a guitar, until it becomes intuitive. Think we have it now? But the practise, practise, practise has to go on, until the VIRTUAL BROKERAGE TRADING ACCOUNT recovers and then earns 50% before going into real money. Thats the theory anyway! ( GRIN! )

VIRTUAL BROKER TRADING ACCOUNT REPORT
From: 11th November to January 25th. EXPERIMENTAL LEARNING TRADING SYSTEM TRIALS!

END OF JANUARY REPORT

START WITH: Balance $5000
11th November 2009 OEX 505 CALL +310 Balance $5310 Total Capital + 4%
30th November, 2009, OEX 510 PUT - 660 " $4630 ( - 7%)
4th December, 2009 OEX 515 PUT - 225 " $4365 ( - 12%)
5th January, 2010 OEX 530 CALL - 20 " $4365 ( - 14 %)
8th January, 2010 OEX 520 CALL -100 " $4265 ( - 12% )
25th January, 2010 OEX 505 PUT +100 " $4365 ( - 12%)
1 st February, 2010 OEX 500 CALL -580 $3765 ( -24%)
2 nd. February 2010 OEX 500 CALL +100 " $3865 ( - 20% )
3rd February 2010 OEX 510 CALL -360 " $3465 ( - 30%)
23rd February 2010 OEX 505 PUT +115 " $3600 ( -26% )
( Losses so far! Switch in trend messed me up. )
25th February 2010 OEX 505 PUT -580 $3100 ( - 38% )
4th March OEX 510 MAY 510 CALL + $520 $3620 (-27%) Account loss/profit %
5th March OEX APRIL 520 CALL + $130 $3750 ( -25% )
OPTION HOUSE VIRTUAL ACCOUNT ( play money ) has a balance of $3629 Not sure where the difference comes from? I'm presuming my accounting is too casual and rough? Doesn't matter right now, the numbers are only needed rough, as I'm experimenting with trading methods and the numbers only reflect the success or failure of a trade and balance.


=====================================

NEWER SHORT TERM PAPER TRADING PRACTICE


JANUARY QUICKIE TRADES
$5000 -0- ( START BALANCE )
PUT + 300 (- 20) = $5280 + 6%
??? + 460 (- 20) = $5720 + 15%
PUT + 130 (- 20) = $5850 + 17%

February 2010
CALL ( -70) - 20 = $5770 + 15%
CALL + 120 - 20 = $5870 + 17%
CALL - 380 - 20 = $5470 + 9%
CALL + 120 - 20 = $5560 + 11%
CALL + 55 - 20 = $5595 + 11%
CALL - 50 - 20 = $5525 + 10%
CALL - 350 - 20 = $5155 + 3%
PUT + 260 - 20 = $5395 + 7%
PUT + 20 - 20 = $5395 + 7%

March 2010
CALL +390 -20 = $5765 +15% - (These two were a STRADDLE EXPERIMENT)
PUT -190 -20 = $5555 +11% -( 2nd losing half of straddle - bit slow at STOP)
CALL ( April ) $70 - $20= + $50 Percentage for total account gain = $5605, +12%

CALL 520 strike +$80 - $20 commission = + $60 Account balance: $5665 +13%
CALL 535 strike + $230 -20 commission = + $220 Account balance: $5895 +17%

=======================================

ONLY TRADES OUTSTANDING ARE IN EXPERIMENT WITH CREDIT SPREADS
Waiting for EXPIRATION on that in a week from now.
The CREDIT SPREAD was put on when the OEX was at 520.45 Another Channel Credit Spread setup has been put on also.
If the index is still above that next Expiration Friday, March 19, 2010. I keep my money.

I sold March 520 PUT for $5.90 ( 5 options ) CREDIT = +$850
I bought March 515 PUT for $4.20 ( 5 options)
The sold options ( 5 contracts ) brought in $2950 )
The bought options ( 5 contracts) cost $2100 for a net cash in hand, of +$850
This credit spread is sometimes called a Vertical Spread and is based on the market going up. This particular spread was placed at the beginning of a BULL trend and finished out earning +$850. We got to keep it at expiration.
( all these credit spread experiments are PAPER TRADING )A learning tool!
__________________________________

CHANNEL CREDIT SPREADS
Sell CALL 535 - .85cents +$425 ( waiting for expiration Friday to see what
Buy CALL 540 - .50 cents happens to this experiment on paper.)

Sell PUT 505 - .35 cents +$175
Buy PUT 500 - .30 cents
This spread ultimately LOST -$475
The reason is: that the upper Bear Vertical Spread was threatened and closed out, then rolled over into the next STRIKE UP. During the market action, the OEX reached within a fraction of a point of the Sold 535 CALLS and so was covered and rolled over. At first the coverage was good and we might have finished this Channel Spread, sometimes called IRON CONDOR lately, at about +$15. Unfortunately, when rolling over, the upper spread of the channel, the delays in implementation, saw the prices change and the net result was a loss on this Channel Spread of -$475 and you must add the commission costs.
Sad to say, if we had left the spread alone, the market did not quite reach the 535 CALL STRIKE and did actually end the expiration period and would have earned +$600 if held. You never know these things before hand, and I'm satisfied by closing the upper channel spread, and rolling it over I did the right thing.

We also tried later in the month nearer to expiration a few days, another CHANNEL credit spread. Sell the C 550 @ .15 cents ( 5 contracts ) = +$75
Buy the C 555 @ - .10 cents( 5 contracts ) - $50 for a credit of +$25

The bottom part of the channel of two credit spreads was:
Sell the PUT 505 @ .35 cents for + $175
Buy the PUT 500 @ .30 cents for - $ $150
This gave a return in cash of + $ 25
This gave a return of the two spreads at + $200 for profit at expiration. Before commission costs.

WE TRIED AN ACTUAL LAST DAY SINGLE CREDIT SPREAD ON EXPIRATION FRIDAY, THIS IS WHAT WE GOT! Sell the OTM 530 CALL at .60 cents = +$300
Buy the OTM 525 CALL at .05 cents = - $25
For a gross profit of $300 - $25 = +$275 ( 5 contracts )

__________________________________________

Interestingly enough, there were around $14,000 CALLS out until expiration, you could see on the option chain, in the 535 and the 540 options. If each earned $300, that would have been as spreads equal to: 2800 credit spreads at 5 options each leg. For a total earned and they did go to expiration, barely making it, in the last two days, as the 535 was threatened but not rolled over, $840,000. Don't know how many spreaders were involved, but it was a good chunk of change in total.

Never tried such a thing as a CREDIT SPREAD before, so anxious to see how it works? My understanding and learning process is that if the INDEX is still above the starting point of 520.45 at expiration, I get to keep the $850 when I close out, or they expire or something like that. I learn by doing, so I'm doing on paper and lets see what happens?

My conclusion is: I will not do CHANNEL CREDIT SPREADS, ONE ON EACH SIDE. ( SOMETIMES CALLED THE IRON CONDOR ) However the credit spread is a trend following system. You need to put it on at the beginning of a same month, expiration Friday trending market. That I probably will do again. A single Vertical CREDIT SPREAD in the longer BULL trends, about 6 or 8 times a year. I'm not sure of the margin requirements on these yet. So I don't know how much you need in your account, as if they lose, they lose big time. The risk reward ratio is bad at roughly 6 to 1.
=====================================================================

***** This report is getting a bit congested. We are carrying the balances forward into REPORT #12 and will start to record actual trades since most of the methodology experiments are now concluded. I will be doing trading in real time to see what happens? Go to REPORT #12 in this BLOG for a continuation.
________________________________________