Closed SPX Calls

Didn't really get a quick run up as I was hoping. With less than two weeks left on the options I decided to close them out for break even. Account is still at $109,576. I will probably be looking to take a quick PUT position soon as the market might sell off here.

Modified SPX trade

I decided to close out all of the SPX trade except for 125 contracts of the 1695 Calls. I feel there may be a little more upside left in this run and I can try and get back some of the losses. Buying back the SPX trade was a loss of $34,899 putting the account at $109,576. Hopefully we can get back most of the loss in the next couple days with some upside follow through.

New SPX trade opened

Opened a new SPX trade:

Sold 325 SPX Jul4 1690/1695 Bear Call spread for .85 credit

This trade has a potential profit of $27,625 on a risk of $134,875. This would be a 20.4% ROI with a little over two weeks left.

I feel the market is due for another pull back or at least will trade sideways here for the next week or so.

Closed SPX trade

I decided to close out the SPX trade for a $2,828 loss as the market is looking like it might try to re-test the 1650 level which would potentially put this position in a lot of danger. With only two weeks left I don't want to risk getting into a similar spot I was a couple months ago and end up with a huge loss. By the end of this week we should have a better idea where we are going. I will look to add a new position at that point.

New SPX trade

Decided to open a new SPX Bear Call spread today as I think the market will head lower for the next couple weeks.

Sold 350 SPX Jul 1660/1665 Bear Call spread for $1.00 credit.

This trade has a potential $35,000 profit on $140,000 risk with about 3 weeks left. This would be a potential 25% return.

Closed SPX trade early

With the small bounce here I decided to close the SPX trade out early. Bought back the 320 contracts for .60 which was a $11,875 profit. This ended up being a 9.1% ROI in about 4 days. This puts the account at $144,475 total.

I feel the market will make another attempt at a sell off soon and I didn't want to get caught in the position close to expiration. I will look to open another Bear Call spread on the sell off.

SPX Trade

Returning back to the Project 2013 I opened a new SPX  Bull Put spread yesterday.

Sold 320 SPX JUL2 1525/1520 Bull Put Spread for $1.00

This has a potential $32,000 profit on $128,000 investment for a potential 25% ROI. I will probably end up taking profits early though if we rally again on Monday as this trade is already up $9,500 from the late Friday bounce. I also think there is a good chance the market sells off one more time and I would like to use that next sell off to open another trade.

Real trade update

I had a pretty successful trade the last couple days and was requested to describe it on here.

I placed a real money trade in my account taking advantage of the Fed speech on Wed and the recent two day market decline. I knew the market was going to use the Fed speech as the catalyst for the next directional move. With the chart below showing the market where it was last Tuesday, my upward targets were approximately 1670 and then 1690 area. The downside targets were 1624 and then a retest of 1598.

Once the market turned bearish from the Fed comments I purchased 8 of the SPY Jul1 163 Put's for $1.53 per contract on Wed which cost $1,223. The market sold off into the bell to about 1628. I ended up with even better results than I had anticipated as the market continued to sell off past my first two targets the next day without showing any signs of bouncing.

I was able to sell them at the end of today for $5.23 per contract for a total of $4,424 for a gain of $2,960.  This was a 242% ROI in 2 days. Even though I think there is a good chance we could test that 1543 level soon, I chose to take the profits as the market is quite volatile and we have pierced the bottom Bollinger band on today's extended sell off. There is a goo chance we bounce some tomorrow or Monday.

Waiting

The market seems to be waiting for the Fed talk tomorrow before deciding where to go next. I will wait until the market breaks out in either direction before opening the next trade.

Closed SPX trade

I decided to close the SPX trade this morning early. I feel like the market may try to re-test the highs and I don't want to get caught having to roll the position close to our strikes. I closed out the trade with a $7,300 profit, which was a 6.1% ROI in about a week. The account now stands at $132,600.

I will wait to see if the market continues higher to re-test the highs or to see if we break below the 1596-98 level on the the S&P. This will help decide future action.

New SPX trade

I decided to open another Bear Call spread on this recent bounce.

Sold 290 Jul 1 SPX 1690/1695 Bear Call Spread for .90

This has a potential profit of $26,100 with 3 weeks of time left. This would be a potential 22.1% return.

Closed SPX May 31st trade

I was able to close the SPX trade we opened on May 31st early for a $11,779 profit. This was a 10.7% ROI in less than one week. The recent market sell off allowed us to gain the majority of the profits early and I have decided to take them. I believe we will see a small bounce here possibly back up to the 1645 area on the S&P 500 ( Possibly by Monday) and I would like to then enter a new Bear Call spread at that point.

The account is now up to $125,000.

Closed SPX trade and opened another one.

I decided to close the SPX trade early as the trade was up $13,400 of the potential $22,000. I also wanted to take advantage of opening a new position.

The final numbers were a $13,400 profit which was a 13% ROI in about 3 weeks. This puts the account at $113,400.

I then opened a new SPX trade:

Sold 250 SPX Jun 1700/1705 Bear Call Spread for .60

This has a $15,000 potential profit on $110,000 for a 13.6% ROI we three weeks of time. I will be looking to add a bottom position to this trade if there is a big sell off to complete the Iron Condor. This would allow me to add more potential profit to the position.

SPX trade update

The current SPX trade is in great shape as the market pulled back and is now well below our strikes. If there is continued selling we will probably be able to close out the trade early.

Modify SPX Trade

I decided to roll the the current SPX trade out another two weeks to the second week of June expiration. The market continues it's relentless rally and in order to keep from making the same mistake as last time I will adjust the trade now. Our new position looks like:

Sold 200 of SPX 1700/1705 Bear call spread

The adjustment added .60 credit for a total of $1.10 (.50 from original trade). This adds another two weeks of time to the trade making it a 5 week trade and puts the potential profit on the trade at $22,000 for a 22% ROI.

Attempt #2

I have reset the account back to $100,000 after the first failed attempt. I have placed the next trade today by opening a top position only. There is considerable downside risk right now with this continuous upward trend. I will look to add the bottom position on a decent pull back if it comes.

Sold 200 of the 1675/1680 Bear call spread for .50

SPX Trade update

The title of this post should really be "How not to do this strategy". :P

The market has been on an unbelievable tear for the last 2 and half weeks. I had hoped for a pull back earlier this week to try to salvage this trade but the market continued to rip. This trade is pretty much a complete loss and there is nothing really to salvage. It's possible we could have a quick sell off tomorrow or Friday which might allow us to get some money back but it would need to come back down close to our strike at 1610 which is a steep sell off in two days. While the last two weeks were pretty brutal for this strategy, there were still two consecutive mistakes that I made that caused me to be in this situation.
#1 - When I opened the top side trade on Apr 26th I was way to aggressive with choosing the 1610/1615 strikes. I assumed the recent top resistance at 1595 would hold and it did not.
#2 - On May 3rd the market gapped up above our strike price on the good jobs number report and instantly putting the position down almost 50%. While the news isn't something I could have controlled, it was how I reacted that caused the next mistake. I assumed that the market would need to make pull back soon and it would be better to adjust the position at that point. I should have rolled the trade out right then as adding in the extra premium of another week would have given me more time and more options this week to do another adjustment.

If I had chosen a more reasonable strike of 1625/1630 on Apr 26th, then the position would not have taken such a large hit on the gap up and it would have been way easier to adjust the position. This was a good example of taking a bad situation and making it even worse.

Adjustments and attempting to limit losses are the most difficult part of this strategy. While it is only a small percentage of the time that these type of situations occur with this strategy it can easily wipe out the entire trade if not managed properly. This is also a good example of why they say you should only use a max of 20% of your account in this trade at a time.

May 3rd Update - SPX trade update

The market had a gap up today on decent job numbers. I was able to buy back the bottom position for essentially pennies which is around an $11,000 gain on that part of the trade. Unfortunately the gap up has gone into the upper trade strike price which has put the total position in a big loss for the moment. I feel the market is over extended right here with today's candle above the upper bollinger band and I think we will have a pull back hopefully early next week.  I plan to wait on this upper trade to see what happens on Monday and Tuesday.

SPX trade update

With today's pullback I decided to add the bottom portion of the SPX trade to complete the Iron Condor.

Sold 250 of the May2 2013 1535/1530 Bull Put Spread for .45

This adds another $11,250 in potential profits to our original trade with 7 trading days left till expiration. The total potential profit of the trade is now $32,500 which would be a 35% return on investment.

New May 10th SPX Trade

I opened a new SPX trade, but decided to only open the top side of the trade for now. With volatility up, I feel like the market could make swift sell offs which could be difficult to deal with. I may add in the bottom leg of the trade if we have a big sell off, but for now I plan to just use these Bull Put spreads to keep my downside risk low during these volatile times.

 Sold 250 of the May 10th SPX 1610/1615 Bull Put Spread for .85

This trade has a potential profit of $21,250 on $103,750 investment which would be a 20% return in two weeks.

Closed out SPX trade

I decided to close out the SPX trade as the market is putting in a good rally and it will probably end up testing market highs by the end of the week. This would put our upper strike in jeopardy so it's easier to just take the profits now and start looking for the next trade. The final profit on this trade was $15,800 which was a 17% return on investment in a little under 3 weeks. The account is now at $125,800.

SPX Trade update

Our SPX trade is looking great as we are right in the middle of our top and bottom strikes which is a perfect spot to be in with 4 days left till expiration. I plan to keep a close eye on our trade as the market is pretty volatile right now. As long as we don't make any large moves then I will plan on letting the trade expire on Friday for the full potential profit. Otherwise we will close the trade out for a smaller profit. Currently this trade as it sits, is up $15,990. The adjustments last week of buying the lower portion back and being able to sell it back again later during the sell off for more money has added another $6,000 in potential profits for this trade since Apr 8th.

4/16 - SPX Trade

After a nice pull back yesterday I was able to add a lower position back to our trade and get our profit potential back close to where it was. I placed the following trade:

SPX Apr4 1520/1510 Bull Put spread for .75


I'm hoping we will chop around in the area for the next week or so. Our trade is still set to expire Friday Apr 26th.

Close out lower part of trade

I closed out the lower portion of our trade on the impressive rally of the S&P 500. Was able to buy back the 1495/1485 strikes for $2,750. The current rally is putting pressure on the upper section of our trade. I will keep an eye on the market as our plan will be to roll the 1600/1610 trade out on a decent pull back in the SPX after this quick rally.

New trade for 4/26/2013 expiration

I opened our next trade today and decided to go with the 4/26 expiration which is an extra week longer than normal. This was due to the low returns for the strikes I wanted on the 4/19 expiration. The market is very tight right now and I expect there will probably be a volatile move within the next couple weeks on the S&P 500. Those are quite dangerous for these credit spreads so I will have to keep an eye on the market.

I sold 110 contracts of the SPX Apr4 13 1600/1610 1495/1485 Iron condor for $1.50 credit. This results in a potential $16,500 profit on $93,500 investment for 18 trading days which would be a 17.6% return.

The green bars below represent our strike prices and we need SPX to stay in between them. I could not get my chart to extend higher so I placed the top green line at the top of the chart, but our real line should be placed at the 1600 level.

Friday's 4/5 SPX trade

The SPX trade expired last Friday successfully for a $10,000 profit. That was a 11% return on investment for 11 trading days.

4/3/2013 Update

Beautiful sell off today on the S&P 500 for our SPX trade. I now feel comfortable holding the trade through expiration on Friday to get the full amount. The trade is now currently up $8,497 of the potential $10,000. After today's sell off I don't see much risk to either of our strike prices so we will hold through expiration as to not have to pay the extra commissions to close out the trade.

Trade update

The SPX had a nice rally today to get back to new highs again. It gave back some of it towards the end of the day which leads me to believe the upside here is still very limited this week. I still feel safe keeping this trade open, but will need to keep an eye on the market tomorrow. Bollinger bands are starting to squeeze and the chart is up against the top Bollinger band. Ideally I'd like to see some action similar to the chart area that I highlighted in yellow below. This would see us pull back to the lower Bollinger band around 1540.

Tomorrow should be interesting.

SPX - Nice pull back

The S&P 500 had a nice pull back today which helped drain a lot of the option premiums in our trade. Our trade has 4 days left and is currently up $6,840. As long as the market doesn't make any big moves up, we will plan on letting this trade expire on Friday to collect the full amount.

SPX trade update

The market decided to break out to the upside today and the S&P 500 has made all time highs. I still feel that upside is limited and a pull back is more likely, but I will have to keep an eye on the market next week and monitor the top side of the trade. If need be we can roll the trade out another week.

Premiums have already declined and this trade is currently up $2,951. Ideally the market should sell off some next week or chop around and allow these options to expire worthless next Friday so we can collect the full $10,000 profit.

Market is closed tomorrow so trading will resume on Monday with only 5 days left in this trade.

March Trade - SPX

Ticker: SPX  (Cash index of the S&P500)
APR1 13 1590/1600 1485/1495 Iron Condor for $1.00 credit.

This trade has 12 days left with an expiration on April 5th. The trade has a 73% probability of finishing below our 1590 strike and a 98% probability of finishing above our 1485 strike. I feel that the top range is limited over the next couple weeks and a pull back is more likely. There for I went with more downside protection on this trade.
Traded 100 contracts for a potential $10,000 gain on $90,000 buying power. This is a potential 11% return on investment.

I actually placed this trade on Friday the 22nd.. Need the trade to stay between the two green lines for the next 10 days to keep all the profits.

2013 Project

I will once again be active on this blog as I will again be tracking my credit spreads with a paper trading account of $100,000. This strategy is my eventual long term strategy once I have acquired enough capital.

The goal is to follow and implement the strategy now to make sure I am experienced enough to handle adjustments in different market conditions to help limit mistakes once live trading starts.