"Positive Forward Carry"
(Remember to do your own due diligence on all your trades. We do not give investment advice. If you haven't reviewed my risk disclosure yet make sure you download it here)
Making money off other peoples money. It's such a seductive and alluring idea but is it really possible? I thought I would try a real world experiment to see if it can really work.
The premise is this: Can you give yourself a $15,000 dollar a year raise by using other peoples money (O.P.M.) Can you essentially create money out of nothing other than a knowledge of how to trade effectively in the market. It's a good question and lots of theory's on this idea are floating around on the internet. I thought I would give it a real world try for 12 months and see what the actual results are. I will do this as a blog and update this page at least monthly if not more frequently on the progress so check back often!
7/8/12
I have several credit cards that are always offering promo rates of zero percent for extended periods of time, six months, sometimes as long as 24 months. I would usually throw those away. We thought it would be fun and a good exercise to put some theory to the test and use those offers to see if I could produce a positive forward carry. Make money off of other peoples money. I have a Discover card that has a promo offer of 0% interest for one year (12 months) and a 2% transaction fee. I took a cash advance of $15,000 dollars and was charged a $300 dollar fee. (see the screen shots below)
The goal will be as follows: Generate enough income from cash flow trades in my account to firstly, make the monthly payments on the Discover card out of the trading account profits. This doesn't make sense and wont work if I have to dip into my own funds to make the payments. Second, I need to make enough money to pay the card off in 12 months. That is obviously the bigger task! I think we see daily examples of positive forward carry's happening. Banks go into debt to us to borrow our money and use that debt to make money off our money. We know it works. The key is can we make essentially a 100% return in 12 months to pay this card off. Actually I doubt it. That's a high goal but I will give it a try and see what the results will be. The first hurdle is just to be profitable at the end of the 12 months. If I can actually make anything above my carrying costs my imputed rate of return will be infinite! Any return from free money is infinite. If I can pay the whole card off in 12 months that will just be icing on the cake.
7/9/12
Today is the first day that the money that I transferred into my account last week is cleared and ready to trade. I put the money in an idle account that already had $100 dollars just sitting there so we will need to remember 12 months from now to back out the $100 dollars extra that we started with. (See screen shot below)
I'm going to start off today breaking the number one cardinal rule of trading and not use position sizing or diversification. The time frame on this experiment and the lofty income goals are too overwhelming to use proper risk management techniques so please make note of this. This is not how I or anyone educated would recommend you manage an overall portfolio. I am going to put all $15,000 into one trade will a little dry powder left to make any adjustments and allow for potential margin calls. This will mean that risk management will be the key to this working. I am going to need to employee very tight stop losses to avoid getting blown out in the first trade! This may mean that I will get kicked out of several trades at small losses before I get a trade to work. Patience will be important. I need to generate at least $1275 dollars a month in positive cash flow in order to make the lofty goal of 100% returns in 12 months but obviously I just need to make $301 dollars in twelve months ($1 dollar more than my carry cost) to make the experiment a success. Any profit will be considered essentially "free money".
Here's the trade I'm going to do and the idea behind it. I'm going to trade a credit strangle on UNG for a July expiration so this will be a two week long trade. I like to trade issues that have a non equity correlation and don't necessarily go down when equities crash.
Right off the bat you see one of the issues with trading. Bid/Ask spreads, slippage, commission charges all combine to almost always get you started off in a trade at a loss. Theta will hopefully work it's magic and as the next two weeks go by, erode the value of the calls and puts I've sold to hopefully zero. This trade could make me enough in two weeks to generate the income I need for the whole month so let's see how the next two weeks unfold.
7/9/12
Well, I have a little too much buying power left to cover adjustments and margin calls so I'm not being as effective as I could be. I'm going to throw a weekly VXX trade into the mix. It will be a small trade and expire in 4 days. It will add a little diversification and an extra little negative correlation to market moves.
I sold 15 of the weekly's on VXX. Naked put transaction 88% probability trade based on the delta. Margin was $2548 and net after $10.75 commission was $94.25 credit. That's it for now. No more buying power with these two positions until next Monday
7/16/2012
Well the VIXX position we sold has expired worthless so that was a wonderful trade and Theta is doing its job on the UNG position and eroding it's value. We are up nicely in the account right now. See screen shot below:
6.78% return in a week is pretty impressive but obviously isn't something that I think can be maintained or should even be a goal. If we can do that in a month it would be wonderful. As you can see, we now have $5201.41 buying power back in the account after the VXX trade expired so will need to put some of that back to work today. I'm going to again do a naked credit strangle on the VXX weekly's. See below:
I sold 28 contracts of the VXX weekly's, both the 12 strike puts and the 17 strike calls. They netted $119.10 after a $20.90 commission. They should hopefully expire worthless this Friday so it's essentially a four day trade. I had to put up $3998.40 to get the $119.10. Almost a 3% return in less than a week if it works. That drops my buying power down to $1332.19 which is about as low as I want to go. Remember, the goal here is to remember that in a couple weeks we will need to make a payment on the Discover card. I'd like to pay $1250 a month which would get us paid off in a year before the 0% rate expires plus, I'd like to withdraw the $100 dollars extra that was in the account to start with and pay the extra, one time fee of $300 dollars that was the 2% transaction charge. That means well need to be able to pull out $1650. Were getting close now with an approx account balance of $16,158. Next trade (barring any unforeseen adjustments we may need to make) will be next Monday so check back then.
7/18/2012
O.K. the first day of reckoning (the first of 12) came today. I got my first statement of my Discover card. See below:
A couple points of interest and things to keep in mind. First off, this is a credit card with an $18,000 dollar limit that I just don't use. I love my Visa Black card and AMEX Delta reserve cards. I believe every time you use a credit card you should get paid for doing so. I like to say, "the credit card companies pay me, I don't pay them". What got me thinking about this dormant card was a promo letter then sent me basically saying, "Hey if you will use our card and charge $1000 dollars in the next month we will get you $100 dollars back! I spend over $10,000 a month on my cards so that was a no brainer to divert some spending towards this card. You will see the $1750 I charged and also the $100 dollar credit on the statement. I love free money!!!! You will also see the $300 dollar fee I was charged for the $15000 dollar withdrawal and the fact that its at 0% interest until July of next year. Payment is due on August 11th so I've got two and one half weeks of trading left before I've got to withdraw some money from the brokerage account to make the first payment. The goal for this first payment is to pay $1550. $1250 /12 will pay off the card before the 0% promo is over and $300 extra in this first payment to cover the withdrawal fee.
7/21/12
Well, it was a HUGE week of success! I can't and won't expect that every week will go this well. It's just not how trading works but you relish it when it happens. We are now officially two weeks into the experiment and our account value is up over 9%. Clearly we are overshooting our goals here so it's unexpected but nice. All our options expired worthless yesterday on Friday's expiration so it was a perfect week of trading. We will have all our money freed up to trade with again come Monday. I'm going to try to get two trades together for next week. One again will be a longer term one with the Aug. expiration cycle and one will be a weekly. We could stop the experiment right now. Pay off the card and pocket over $1300 dollars of "free" money but let's keep going.
7/23/12
Big day today of putting our money back to work. With all option positions expired we have all our capital back to trade, see below:
Were sitting on a 9.25% return for the two weeks. Nice! This weeks trade is a earnings play on Apple (AAPL). It will be a credit Iron condor. Apple will report earnings on Tues. and we are trying to build the legs of the spreads far enough out that we will stay out of the subsequent volatility that should result on Weds. as the stock reacts to the announcement. See the trade below: It's got four legs in the condor and requires $9240 dollars margin. Net credit was $2745.70 and it will expire the third Friday of August. 27 days from now. This is a big trade, it will result in a 29.7% profit if the trade works. With big rewards come risk so I'm leaving some margin to work with as the month goes by so if after this Weds. we need to make adjustments we can.
Here's what the account looks like with the trade being executed:
7/24/12
I'm going to ad a hedge to this AAPL trade. We seem to have more protection to the downside if the earnings announcement is bad tonight. My concern is if it's a blow out to the upside. We brought in over $2700 dollars in premium which is plenty so I'm going to spend about $700 of it on a insurance hedge to the upside just for one week. Once we get through earnings the stock should hopefully move more predictably. See the hedge trade I added below:
This will lower our return potential but also give us some protection to a potential outsized move to the upside.
Just added another trade. We probably have to much "dry powder" with $6600 dollars cash still sitting idle so I added a LEAPS covered write trade with NEM it is a variation of the covered call trade just substituting a L.E.A.P.S. option (long term equity anticipation security) for the stock. I wrote the weekly almost at the money so its not a "home run" type trade but should hopefully give us a little diversification against the AAPL trade and a source of weekly income for the foreseeable future. See trade below:
This lowers our buying power to $4100 dollars. That's fine until we see how the AAPL trade moves on Weds. of this week.
Here's how the account looks at this point:
7/25/12
Well the AAPL earnings announcement couldn't have gone any better for us! It came out short and AAPL tanked almost 30 points but as planned, based on implied volatility it stayed within our range of expectations. Our insurance hedge to the upside is now basically worthless but that is how it goes with insurance. We buy it hoping to never need it. Our account has had a huge pop to the upside now with this result. See the screen shot below. We are now up over 15% in approx. three weeks. Great start to the 12 month goal we have.
I'm putting on one more weekly trade that will expire this Friday (so really a three day trade). On JCP (JC Penny) This is a naked put trade. Pretty straight forward. JCP seems to have found some support around 20. I would be interested in owning this stock at those levels. If not we will get paid nicely for the weeks efforts. See trade below:
This trade took $3155 of margin and nets $110 dollars credit after commission. A 3.1% return for three days potential. I'll take that all day long. Let's see how it goes. We are now out of avail. capital so we will sit until Monday. At that point our weekly's will have expired hopefully worthless and we will have our capital back to go trade some more.
7/28/12
Well, the week went extremely well for us. Almost too good! Were off to an incredible start but I don't want anyone to get the impression that this should be expected to continue. We are not going to be making 10% returns every week continually! Here's where our account currently sits:
7/30/12
We have some cash we need to put back to work today so I'm adding the following trades:
We own the NEM leap at 40 strike so were selling these weekly calls against that position to generate $120.05 of income for this week.
Sprint just bucked the trend of companies reporting poor earnings and came out with some nice numbers. This is a naked put three week trade and one of the few bullish trades we've made so far. Putting up $946 dollars to make $128.50 in three weeks potential. 13.5% return potential.
Always like to have a hedge against downturns in the market. The VXX is a weekly and could add $60 dollars profit for the week and a little downside insurance.
That's it for the week unless we need to make adjustments. AAPL is jumping but still a safe distance from our Iron Condor Call strikes. We will watch that trade closely to see if we may need to make some adjustments in the next week. Here's what our account looks like for this week:
8/01/12
We are going to add an offsetting VXX call position to hedge the naked put VXX position we have and bring in a little income as well. See below.
8/5/12
The week went very well for us. All our hedges and credit trades expired worthless and we made a nice cash flow. See where we are at this point below.
8/6/12
Starting off this week we need to write a new call against our NEM LEAP position to generate some cash flow. We sold the Aug. 46 strike so this is a two week trade and will bring in $210 dollars in cash flow. See below:
Were going back to the VXX weekly trade. It's almost a 10% profit potential for one week. Credit strangle, see below.
This uses up most of our available capital for the week. I will need to pull out funds to make our first payment in a few days. The only other change I see happening this week is we are keeping a close eye on AAPL. It's getting dangerously close to our upside call leg on our Iron Condor trade. Its up today about 3 dollars. If AAPL is up again tomorrow I'll probably close that leg out.
Well, that didn't last long! AAPL is just popping every day. I'm going to close out the short call leg of the Condor and hold the long leg for a few days to see what happens. See Below:
8/7/12
We have achieved about all the profit we can from our AAPL put spread so I'm going to close it out and free up our cash for another weekly trade. See below:
This gives us a bunch of buying power. I'm going to put a credit strangle on BOIL (leveraged ETF on Natural gas) It's a week and a half long trade $4900 investment and can cash flow $784 so its a high income but more risky trade than we've been doing so I'm going to leave some buying power in the account incase we need to adjust the trade. See trade below:
I am also going to pull out $1650 to my checking account. $1250 for my monthly payment to the credit card plus $300 for the cash advance fee plus I want to remove the $100 dollars that was sitting in the account when we started this project.
8/8/12
I pulled out $1650 today to make our first payment. Great success so far! I also added an SLV credit strangle with the remaining cash we have to bring in a little income in the next week and a half. See both actions below:
8/13/12
Well, were winding down our first month with a monthly return of approx. 15%. Can't beat that! Way more than expected as I've said and I'm sure we won't be able to continue that pace but it's nice when it happens and of course we'll take it. Our BOIL trade was a little too aggressive it looks like. It's right down now on our put strike price so we will do an adjustment trade and roll the strike prices out farther and go out another month to Sept. That's probably the only trade we will make for this week. See the adjustment trade below.
8/16/12
Were going to roll our NEM hedge that is protecting our NEM LEAP. We rolled it out to the Sept. 46 calls and brought in another $200 dollars in cash flow. See the trade below:
8/20/12
A lot of our positions expired last Friday worthless like we hoped and we have some more cash to put to work. I'm not going to use it all as I want to have some "dry powder" to adjust the BOIL position if we need to.. Here is the only trade I'm looking at for this week. It's a weekly VIX trade that will require $3736 of capital and bring in $420 dollars of capital for the week. Nice trade if it works. See trade details below:
8/21/12
O.K. I lied. I am doing another weekly trade this week. The BOIL position is getting more delta neutral and I'm feeling better about it so we don't need to be sitting on $5000 dollars of cash. I'm going to generate a 3 1/2 day trade on AAPL. It's an Iron Condor. We will need to put up about $5000 dollars capital to bring in $300 dollars of premium. That's a nice return for less than 4 days and it's got some decent strike prices to allow for a little movement and we will still be o.k. Our VXX trade is getting close to our put strike price but we can roll in on Thurs. if need be. See the AAPL trade below:
8/27/12
Last week was another really nice week. Most of our options that we sold expired worthless like we always hope and it gave us about $8000 dollars purchasing power to work with this week. Here's a quick peek at how our account values look right now.
Were up about 29% in less than two months. Pretty great and way beyond our initial hopes. I'd like to be able to make a two or three thousand dollar payment on the Discover card in two weeks to get us a little ahead. It's almost inevitable that we have a down month were we won't be able to have the funds to make our planned $1250 payment so it will be nice to get ahead a little. I'm taking our capital available and doing another Iron Condor with weekly options on AAPL. It took about $7000 of capital and will give us a credit of about $300 dollars for the week. See trade below:
The only other trade I look to make this week is a possible adjustment on our put leg of the BOIL trade. I'm going to roll the strike prices down from the 59 calls and 38 puts down to the 45 calls and 33 puts. See trade below:
8/28/12
I'm going to throw another weekly VXX trade (naked put) into the mix. 4 day trade. It takes $2170 of capital and will generate $100 dollars income for the week potential. That takes all our trading capital so we will need to wait until expiration this weekend to free up some money for more trades. See trade below:
9/4/12
I hope everyone had a nice holiday. We have a shortened trading week because of the markets being closed yesterday. All our weekly options we sold expired worthless once again last Friday so we are positioned to make some more trades. I'm doing two trades today. Firstly, I am selling some weekly 50 strike calls against our NEM LEAP option position. Secondly, I am selling once again some VXX naked puts (weekly's) to hedge some downside risk and give up some protection to a market downturn. Both these trades will generate a few hundred dollars income for us this week potentially. We also need to prepare ourselves to withdraw at least $1250 by the 11th of this month as our second payment on the credit card is due. We will also access where we are at return wise at that point as we will be two full month's into the experiment. See our trades below: Note that we are also getting uncomfortable close to our call leg on our BOIL position and may need to roll that up tomorrow or later this week.
9/5/12
Our BOIL trade has come back into a little more Delta Neutral territory so it's freed up some trading capital for the week. I'm going to use that to put on a short, three day Iron Condor on AAPL to bring in a couple hundred dollars of potential income. Right now we are up over 30% on our account in less than two months so we are far exceeding expectations. It will be interesting to see where we are this weekend when we have to pull money out to make our Discover payment. It would be nice to be able to get a little ahead on our payments. See the AAPL trade below as well as a screen shot of what the account looks like right now.
9/9/12
Well, this past Thurs. and Fri. were not kind to us. We got hit pretty hard with the market jumping by almost 250 points and gave back all our profit from last week and then some! This is our first trade that has really blown up on us and it's a good example of what we will need to be expecting and looking for in the future. This WILL happen again and again. It's the nature of trading. The key is good risk management. I like to structure this account to actually be able to make money if the market is falling , hence the VXX positions we've been using. Obviously when the market spiked like it did that hurts the VXX. I closed that position out at a loss and also rolled our NEM covered trade out for another week to bring in some more income and protection on our long NEM LEAP option. See the two trades below:
I also pulled out $1250 dollars to make our second payment on the Discover card. Our balance is now down to $12,500 and we are still up 23% in two months on our account so we keep plugging forward! We have almost 6000 dollars of capital to work with now so Monday I'll be putting that back to work with a new trade or two so keep checking back.
9/10/12
We did two transactions today. We built another Iron Condor on AAPL that will last two weeks and we withdrew our $1250 to pay down the Discover card. See both below:
Our account now looks like this:
9/17/12
I closed our NEM position late Friday before market close. We have extracted about all the profit we could from that trade. It's left us with some cash to trade with this week of about $3700 dollars.
I'm going to do another naked put on VXX at 8.5 strike weekly option. Gives us some income of a few hundred dollars and some downside protection as well. See trade below:
9/19/12
We've got some good momentum going into options expiration this weekend and have built up some more buying power with the growth of the account so I'm throwing a two day trade in that can bring in $200 dollars of premium on TMV. It's a bear call spread. See trade below
Hopefully this will be the last trade this week. If you see another one Friday it will be because we needed to make an adjustment to an existing trade.
9/23/12
Well, the week went almost perfect for us! Here's a snapshot of our account below. Everything we sold expired worthless. We are now up 38.58% in less than 3 months! Obviously tremendous but unexpected. Don't get used to this is I guess what I'm saying. I'm going to be doing a new, different trade tomorrow on Monday. Its a longer term (December) trade that won't require as much management and less oversight. I'm wanting to put this account on auto pilot till the end of the year. Check back Monday!
9/24/12
We have approx. $16000 dollars that now need to be put back to work. I'm doing two trades today. That are more passive. I'm putting a credit strangle on BOIL that is a three month trade going out until the DEC. expiration cycle. This is a big trade with a net credit of $5900 dollars but it has large bid/ask spreads so it will look ugly in our account for a few weeks until Theta can erode some of the time value.
I'm also doing a one month Iron Condor on AAPL. This will leave a few thousand dollars of buying power in the account so I may just leave that as a reserve since both these trades are bringing us in more than enough premium to keep paying out $1250 to our credit card payment each 11th of the month. See both trades below:
10/19/12
We got absolutely killed on options expiration today! Our AAPL trade that was doing so well blew up on us the last day of expiration!!! We were closed out on it at a $1380 loss. Add to that the fact that we needed last week to pull out another $1250 dollars to make our payment to the credit card and the fact that our last remaining trade on BOIL is pushing up against our call strikes and threatens that trade as well all added up to an account that's now down to $13,120 dollars. If (and it's a big if) our BOIL trade will cooperate with us we should still be fine in Nov. and Dec. to generate enough income to pay our card payments of $1250 but next week will tell the tale. As always, risk management is so critical and we are going full out here to try to accomplish some crazy returns so I don't anticipate that this will be the only trade that blows up on us over the next few months. It's the nature of trading. Keep in mind we are still moving towards our bigger goal and still making our payments on the card so all is still well but this definitely hurts us and sets up back. Look to next week to see if we will need to make in changes in the BOIL trade to save it or if we will just readjust it. Stay tuned.
11/3/12
Well, our BOIL trade is now coming back in line and looking much better! Our account is now back up to over $16000 however I will be pulling out another $1250 this coming week to make another payment on the credit card which will put us back down under our goal position of a $15000 dollar balance but if the trade can hold through the third Friday of Dec. when it expires we will be sitting pretty going into the new year. Almost half way through this experiment and we've had some knocks along the way but so far so good!
1/1/13
Happy new year!!! With our Boil trade working our perfectly (after a few worrisome weeks) we are back to a very healthy account balance. Yesterday as you all know, we had the fiscal cliff issues effecting the market. With our BOIL trade having just expired I took a very large outsized short position in the VXX (on the expectation that the market volatility was overblown and would mean revert) this was a big trade and worked our wonderfully so we've got a nice account value to start the new year with. Please see the status of our account below. As you can see, we have a lot of buying power back but will also need to pull some money out next week to make our next Discover card payment on the 11th. I'm hoping to be able to pull out over $2000+ for a payment to get ahead of schedule and still leave us $15,000+ to trade with. Check back later this week to see what else I'm doing in the account.
1/3/13
O.K. I was busy yesterday doing a lot of trades. Our acct. and positions are listed below. I will give a more detailed update of all these trades this weekend as some of them get ready to expire.
1/4/13
O.K. so today I went big on the withdrawal and pulled out $2200 dollars out of the account in anticipation of our next Discover bill that is due the 11th. See below:
We've had a fabulous last three weeks and it's put us back up ahead of our game plan so this puts us well ahead of schedule. Check back next Monday or Tuesday for some new trades.
1/7/13
Today I balanced out the current positions by adding the other legs to the BOIL trade and the HLF trade, turning the naked puts into a credit strangle. You can see both the executions and the positions as well as our balance below:
You'll notice a couple things. Once again it drops us in the hole when we sell options. The bid/ask spread will always put us at a loss on the day we put the trades on but theta should work for us and hopefully we get some nice erosion in price as time goes by. Secondly you should see we are set up fairly well for the next two weeks with trades so I don't plan on any more activity until these trades expire or, I need to make adjustments. You will also note that if all these trade expire worthless we will have just enough for another $1250 payment to the credit card.
1/16/13
We are getting close to our call strike price on HLF and that's pressuring our margin requirements. (I might have been overzealous pulling out $2200 in profits last week and reduced our cushion too much). Never the less I still believe in that trade and we only have two days until expiration so I'm closing all our other positions so that we can hopefully ride out the next two days and lock in an extremely nice profit for the first two weeks of the new year. See the account as it sits right now below:
1/20/13
O.K. our HLF trade finished 100% profitable and we are once again off to a wonderful start for the month! Over 8% return and we still have another week to do a REALLY big couple of trades. This week the market is closed on Monday but Tues. and Weds. we will be doing some "Volatility Crush" Credit Strangles on GOOG and AAPL. If all goes as planned we will do the GOOG on Tues. and AAPL on Weds. so check back. These could be our biggest trades of the last 6 months (good or bad !) Our account status is shown below:
1/22/13
Big day and big week ahead of us! I'm intending to trade GOOG, AAPL and possibly NFLX and or MSFT this week as all of them are reporting earnings. I'm doing all these trades this week in my bigger account but simply may not have the buying power in this smaller account so we will see. I did the GOOG trade today (See below)
This is an Iron Condor spread on GOOG who reports earning this evening after the market close. There is a decent probability of a large reaction the next morning and we could see a big move. This trade is built under the premise that while it may move, it won't go above 770 or drop below 630 this week. If it can maintain that range we walk away with $1000 profit and put up about $14,000 to get it. A 7% return in one week. Tomorrow will tell the tale of whether I was right on my premise. Here's how the trade looks in the account.
1/27/13
Well, the last week couldn't have gone better in a dream! This is what makes trading so rewarding. Our GOOG trade went perfectly and expired worthless. Check out our acct. value and setup now.
1/28/13
I'm putting all that freed up cash back to work today with three option trades using weekly's on FB, RIMM and VXX. FB is announcing earnings and this credit strangle is hopefully outside the volatility range and will collapse like our GOOG trade of last week. RIMM has some crazy high premiums right now so it's the same idea here. VXX is just a simple naked put for the week under support. We used up approx. $15,000 dollars capital and generated over $580 dollars in premium. Very healthy for one week IF...they all work out. See the trade executions below.
1/28/13
I had another trade sitting at a limit price of .08 on the other leg of my VXX trade that didn't look like it would get filled but did. That completes everything I want to do this week so unless I need to make adjustments this week we will just sit tight until next Monday. See the full account as it currently sits below:
2/1/13
We are on Friday expiration and it looks like unfortunately we are going to need to adjust the RIMM trade. All the other trades are looking to expire worthless but RIMM has dropped down below our put strike. I choose to adjust the trade rather than close it at a loss because 1. I still believe in the trade. 2. I got a "perfect roll" on the adjustment, meaning I was able to gain time (I rolled it out a week), I was able to lower the strike (from 13.5 to 13) and I was able to actually do it at a credit (bring in more income) ...essentially the trifecta of adjustments. Take a look at the account now.
2/4/13
Well, here we are on Monday. Another busy day as most off our cash was freed up and needed to be put back to work. I put on quite a few trades today as seen below:
You will notice I put on an Iron Condor on AAPL. One week and fairly close strikes but I feel comfortable with it. I did a simple naked put on DRYS for about $100 credit. I sold a credit strangle on VXX for about $140 dollar credit and I balanced out our RIMM trade. RIMM has changed its name to BlackBerry and consequently it's ticker symbol has also changed to BBRY. Our adjustment on the put side is working well but I'd still like a little more protection so I've hedged the put leg by selling some 15.5 and 16 strike calls for a $150 credit. All told we have almost $1200 dollars in credit for this week. Hopefully most of them will work out and we will have another stellar week. I did submit a withdrawal request today for another $1250 (that's why you see the account value change) in order to make another payment by the 11th on the Discover card.
2/11/13
Well, last week didn't work out too well. We ended up giving back all the profits we made in the last week. We had several trades, the VXX expired worthless and worked well. Our DRYS is still going and doing well. Our BBRY adjustment ended up not being needed and we really would have been better had we not done it. Last Friday I needed to roll the BBRY trade out a couple weeks and improved the strike price from 15.5 to 16 giving a little more safety and brought in some small credit premium. I will add to this trade this week if BBRY can retrace a little more. The AAPL trade just killed us. It blew through our upper strikes and we closed it out at a loss on Friday. It will be a battle over the next month just to get us enough profit to pay our next Discover bill. Fortunately we had an above average month last month and were able pull out an above average payment amount. We may need it this month.
2/12/13
Here is where the account sits position wise right now:
You will notice that I am still waiting to add the put leg to the BBRY trade. I'm hoping that it's weakness continues and I can get a little more premium out of that leg before I put it on. I did add a call leg to the DRYS trade to bring in a little premium this week. As you can see on the orders section, I wasn't able to get all 30 contracts filled at my limit price and only ended up with 21.
2/13/13
I added a couple trades today. I finally balanced out the BBRY trade with 18 contracts of the 13 strike puts and added a VXX credit strangle with the weekly's. See the trade executions and account standing below:
2/17/13
Our VXX and DRYS trades expired worthless last Friday and gave us a nice return for the week. It just leaves us with the BBRY trade that will expire this coming Friday and approx.10,000 of cash to reinvest. I've put in a limit order on the VXX today and we will see if it triggers. I will be up at my Cabin tonight and tomorrow with no internet access so I will update again on Tues.
2/19/13
My VXX trade did not trigger today so I did an earnings play on HLF. It will report earnings this evening. I did a credit strangle on it and brought in $400 dollars of premium for a three day trade. See the account positions and the trade below:
2/24/13
We had a really nice week last week and all our positions expired worthless for a full profit. We are back up almost $2000 dollars after our poor showing two weeks ago. Check back in Monday or Tuesday for this weeks trades update.
2/26/13
I loaded back up yesterday with several new trades and used up all our $15,000 dollar buying power. I sold a credit strangle on BBRY, a Naked call on BBY, a credit strangle on BKS, a credit strangle on HLF, and a credit strangle on SLV. All expire the third Friday of Mar. except the BBY trade is a weekly expiring this Friday. As you can see I generated almost $1600 in premium so unless they all blow up on us we should have some profits to make our next payment to the credit card the 11th of March and keep our streak alive. I'm out of money to trade so other than closing a losing position or adjusting a trade there shouldn't be too much activity in the account over the next couple of weeks. See our positions below:
2/27/13
I did a little quickie trade today to balance out the BBY naked call. I sold the put leg of 20 contracts with same expiration and 14.50 strike for .15/contract. It brought in $300 dollars premium and it expires this Friday.
3/4/13
Nice week last week We were able to recover from the previous weeks losing position and are right back on track for a nice gain for the month. We had one option expire last Friday and I put that money back to use today with a Credit Strangle on the VXX for a weekly trade that will expire this Friday. Not a big trade but it used up all our remaining buying power so we will sit tight until Friday unless I need to make any adjustments during the week to current trades. See the account status below:
3/09/13
First of all, "Happy Birthday to my lovely wife!". O.K. so last week was awesome. Here's were we are at right now. (see below)
So you'll notice that I rolled one of the VXX legs down and out (I closed the 22 put strike and rolled down to the 21 and went out another week on expiration. This might have been a mistake and I'll need to do something about it on Monday. I had a mental "fart" and completely forgot I needed to make another payment on the credit card this Monday of $1250 so...I'm out of buying power and available funds so I'll need to sell something on Monday to get the funds. It's not that the roll trade was bad but I need to money to make the payment. You will notice we've recovered nicely from the big hit a couple of weeks ago. We are up almost 19% in a little over two months. Just fantastic! Check back on Tuesday or later this coming week to see the withdrawal and any adjustments we may need to make.
3/13/13
I closed the VXX position out which gave me enough cash to withdraw for our $1250 payment. I don't anticipate any action the remainder of this week unless an adjustment is needed. See our acct. below. We are up over 20% year to date.
3/17/13
Pretty darn good week for us last week! Every position expired worthless and we are back to cash. Up 9.12% for the month and 23.59% YTD. We will be putting some new positions on Monday and Tuesday so check back. Here's a look at the acct. now.
3/18/13
Put our money back to work today. Most are longer term trades although I do have some weekly's in there again on the VXX. See the account positions below.
3/24/13
Another pretty nice week last week. Our VXX trade expired 100% profitable. I'm not going to put any new trades on right now as I'm concerned we will need any extra buying power to make some adjustments to our current positions. They are still within the range and doing o.k. but I have a feeling at least one of them will need adjusting. We are now up over 23% YTD. see acct. below:
3/27/13
O.K. our positions seem to be settling in and profit is becoming more important than saving "dry powder" at this point. I went ahead and added another position to the account. It is a credit strangle on DRYS. This position has a big profit potential with limited risk but low probability of success. You can see the whole account, the positions and profit status below:
3/30/13
No change from last post. Everything is going along just as planned with all three positions. They are set to expire in three weeks so you won't see any action unless we need to defend a position or make an adjustment. We are up over 25% YTD (over a 100% annualized return). See account status below:
4/4/13
I needed to make an adjustment to the AZO trade. It pushed up to our top leg and triggered us out so I rolled the 400 strike out to 410. This cost us money and will obviously bring in less premium as well so it's knocked a couple hundred dollars off our profit for the month. The DRYS trade is not really working but it's not hurting us either yet so that's fine and the NEM trade is o.k. for now but may need an adjustment as well. See our positions below:
4/10/13
I pulled another payment out of the account today to throw at the credit card of $800 dollars. We didn't quite make our goal of $1250 but that's o.k. as we are still running ahead of schedule on our payback. You can see the withdrawals below:
And our account as it sits right now:
4/15/13
Well tax day was not very nice to us with our trading account! Precious metals took a huge dive Friday and continued the selloff through the futures market during the weekend and into today's market. Our NEM trade took a big hit and almost wiped out our entire profit from the last couple months. The DRYS trade didn't make anything but also didn't lose and the AZO trade worked out profitable. I've closed out all trades and will be just doing earnings trades this week so each day we will do a new one all the way through Fridays close. Today is GS (Goldman Sachs) they report tomorrow.
4/16/13
We did the GS trade last night and closed it this morning. Good news is we tripled our money. Bas news is with such a small account it didn't amount to much. See the open and close trade below: sold it for .18 and bought it back the next morning for .06
Today before the close we will do Intel and Yahoo credit strangles and see how they look tomorrow at the open so stay tuned.
4/17/13
Intel trade went well (didn't have enough buying power to do the Yahoo trade). It was better than a triple. See the trade below:
We sold the spread yesterday for .15 and bought it back this morning for .04 over a $600 dollar profit. Tonight we will do EBAY so check back tomorrow on that result.
4/19/13
I did the ebay trade in my bigger account and it worked our quite nice but didn't have enough leverage to pull it off in this smaller account so I went will a short two day trade on the VXX. It was a great success and was able to recapture most of our loss from the NEM loss. see how we ended up for the week below. Next week AAPL reports earnings and we will be trading it for sure.
4/22/13
Doing the NFLX earnings trade today. They report after the market close. You can see the trade, the position and what I sold it for in the account snapshot below. You'll see I needed to work the trade several times before it was filled. I'll update this trade tomorrow when we close it out.
4/23/13
Well, good news/bad news scenario for today. Our NFLX trade certainly didn't disappoint with a big move as expected. (see chart below) The bad news is the move was so big to the upside that it's pushing right up against our 220 strike calls making it impossible to exit today at a profit like we hoped. This is o.k.. As long as NFLX stays below 220 between now and Friday we will have a wonderful return on this trade, unfortunately it's not going to allow us to trade AAPL earnings report today because we have no more buying power. We will continue to stay in the NFLX trade and watch until hopefully this Friday it expires worthless or we need to make an adjustment.
4/27/13
Aloha from Hawaii! (my favorite place on earth to trade) Our week of trading went about as perfect as can be hoped. Making over 5% return for the week! Our NFLX trade expired worthless so we will be putting our money back to work next week.
5/1/13
I put on a credit strangle on BBY. See trade below. This trade may need to be worked a little over the next few weeks but it has some nice potential.
5/6/13
I added another put leg to our BBY trade (weekly's again) which brought in a nice $450 dollar premium for the week. See our overall current positions below:
5/8/13
Pulled out another $1250 for our May payment. Our BBY trade is working nicely. Hopefully no adjustments will be needed the rest of this week.
5/11/13
The week went really well for us Our BBY weekly expired worthless and BBY in general seems to be coming down and helping our call leg. We booked over a $1000 dollar profit for the week. We will look to redo the put leg on Monday but I may wait until Tuesday if BBY keeps dropping.
5/13/13
I added a couple of trades today with another put leg on the BBY and a new trade with TSLA which is a bear call credit spread. Both trades will expire this Friday and could bring in Several thousand dollars IF they all expire worthless so this week could be a big help towards getting back up to the returns were looking for. See trades below:
5/13/13
I went ahead and added the Put leg to the TSLA trade as well. It's not a big profit trade but it required no more margin so I added it on. We shouldnt have any more trades this week unless we need to make an adjustment.
5/21/13
Our put leg on our BBY trade expired worthless and resulted in a nice $450 profit for the week last week. I've redone the put side of our trade with a couple legs (overweighting the put side) as you can see below. BBY reported earnings this morning and was light on revenue so it looks like our trade is working nicely. See our current positions below:
I just made another adjustment to the BBY trade, rolling up the put leg for an extra $160 dollars income for this week. See below:
5/28/13
We've got three new trades going on for this week. We are still working the Call leg of the BBY trade in hopes of a pullback there. If it doesn't come we can roll it out each week again and again for an adjustment with a small credit of a few hundred dollars coming in so I'm sticking with that trade. I also added a ratio write to that trade on the put side for a nice weekly credit and then we have one more trade with the VXX which is a weekly trade as well. All told, we brought in about $500 dollars credit for the shortened 4 day week. Not too bad. See all positions currently open below:
6/1/13
We had a great week going up until the last hour of trading! I added a couple trades on Friday. One on the VXX and an Iron Condor on TSLA. Both blew through our strike prices in the last hour of trading and we were assigned both the long position in the TSLA and short position in the VXX. We will need to do something with both of these positions on Monday so stay tuned. Here are the positions as they currently sit.
6/17/13
6/11/13
This week I did another ratio credit strangle on BBY and a weekly Iron condor on the VXX. I also pulled $1000 dollars out to make our payment on the Discover card. We have one more month of payments due and owe approx. $1100 dollars. See this weeks trades below.
6/17/13
Busy day today with 4 trades. Firstly I allowed our short call leg on our VXX Iron Condor from last week to be assigned in anticipation of a revision to the mean today (which did happen). I then wrote some weekly puts against that short position and then I rolled our BBY short calls out to next month expiration and paired those up with some short puts. See all the positions currently in the account below:
6/26/13
No big changes for the account this week. I am staying with the BBY trade which is working fine and added another put sell to the VXX leg. See below:
7/8/13
Were getting ready to pull our LAST payment out on the 11th to pay off the Discover card. We didn't have too many big changes in the portfolio this week. Friday I made a couple adjustments. I rolled the put leg up on the BBY trade as that stock continues to go up and rolled out our put leg on the VXX position as that trade is still working great. See the positions below:
7/9/13
We had about $1100 dollars buying power so I threw on a little three day Iron condor on the VXX for a $50 dollar credit. See all the current positions below:
7.19/13
Well that's a wrap!!!!!!!!!!!!!!!!!!!!! I just made the last payment back to the credit card of $1072 dollars. The free money we had for a year has been paid back all with profits and I've got approx. $12,000 left in the account. A few students have asked me what I'm going to do with the money. Each year as part of my financial plan I make a $55,000 dollar contribution to my SEP retirement account. I'm going to use this $12000 I've made as part of that contribution for this year. In the 35% combined tax bracket that would mean I will make $4,200 dollars guaranteed from the IRS! This investment just keeps on giving.
In short, over 12 months I've made almost $19000 dollars in real return off of no money out of my own pocket! I hope this last year has been a great learning time for you. Please let me know how your doing and how I can help!
Good trading
Scott