ZSG Trading Blog

Another month has ended and I had a pretty good month. I have not quite got all my capital back, but I made some decent headway. So let’s see what I did:

June was a purely Options month. I bought NO stocks and I sold 2 of my remaining positions. 1 profitable, 1 not and over all it was a push with -$4

Options wise, I bought 34 positions and sold 35, with 22 of them being profitable and 13 not. I finished at +$1787 for the month. Not my best overall month for options, but pretty damn close. Had I not had a few postions that go away from me and I should have been in spreads at the time, I would have fared much better.

Spreads, funny that I went to an advanced options workshop and yet, didn’t do any spreads. however, I studied my entries as spread trades, but there was a while when I didn’t have enough capital to make extra trades. So, no spreads for June

Portfolio:

Month: had my best Total month so far with $1783 with that being +13% from the amount that of my own money that I put into the account. Now, I am still -36% cumulative, but the Market is slipping into a bear market and now, instead of being being Techincal (bear flags, etc), it’s falling consistently, so the first couple days in July have been awesome.

I went to Atlanta in the middle of June with Michael from Chattanooga to the Investools Advanced Options Workshop. Although I haven’t technically done any of the advanced options, I have been much better in my trading. I think because the condition in the trades that I in don’t need the safety of spreads. Also, I don’t have the capital to get into the straddles and strangles that are presenting themselves. Now, THAT is something that I would do.

I am going to get in a spread trade in one of the indexes, but I am not exactly sure which one.

I got stopped out of a LVS put by my own mistake and I didn’t have enough capital to get back in… ugh!

(I just realized that this never posted, this was written on 06/27 and I am going to post it now)

Ever since Friday, I have been doing well in my stocks (rather option) trades. Not all of them are big winners, but since Friday, my “liquidating amount” in my account has gone from $3900 to $6000, as I write this. Of course, this is the current potential profit that I could get were I to close my account now. However, that’s not the case, I am staying in some of my position, although I may take profits on a portion. After all, I want to enjoy the fruits of my option labors.

So What Do I Got?

BIDU - Long OTM puts, worthless… a gunslinging gamble that went bust. It wasn’t much, but it didn’t work…

CAT - Puts, but the break from the long channel has been underwhelming. only my UNH puts have been more boring then the CAT puts. It’s still making some money, right now it’s at 2% which is better than what the bank could give me. I might close this one and move on to something more exciting.

LEH - Pick these gems up on Tuesday, 15 minutes after the Bell and less than 2 days later, they are worth 60+% of their initial value! With most of that coming today! I will want to take profits soon. I may do the take 1/2 of your positions on this one and let the others ride with a trailing stop.

LVS - My SHOWGIRLS! Even though it’s a Casino, hey, their entertainment. I have a big position (7 contracts) on this one and it’s moving in the right direction. Hell,, 5 of my contracts are at almost 200% return… better start taking some profits, especially since LVS reamed me last month on a credit spread that went totally against me.

OXY - This is one of the play that is outside of my rules. I had a large position (5 contracts) it went South and so I sold 3 of the contracts to minimize my risk, but I was still bearish on the position. It’s a July Put (I got 2)… it’s still in the red, but moving in the right direction.

UNH - Moving in the right direction, but unbelievably BORING! I’ve had it for about 2 weeks, it’s been in the red for the most part, but now it’s UP $25… oh wait… make that $10. I’m ready to sleep on this one.

V- Probably my biggest “no-no” trade. I’m expecting that bounce anyday…and I need it. It’s a big stinker right now. My big problem… didn’t buy enough time. June Calls that are over $1,000 in the hole. I should have been more on point with my Risk Management here.

VIP - Held over earnings, actually had some calls before earnings, bought some put just before earnings, hasn’t done much. Could get out with minimal loss and move to a more action-packed stock.

So that’s where I stand, I have no problems giving full disclosure of my account. I am a different trader, just like everyone else out there… so you may not have made the same trades. You may wished that you had on some and laugh at me on others. However, telling you how and why I got in (or out) can help other traders realize their own rules and methodology.  And maybe Methodology is a better word than Rules when it comes to trading, because Rules should be broken as the market changes and morphs.

I can’t believe that it is already June… wait I can. I have passed my 1 year of trading and in August will be my one year of active trading. So how do you measure your perfomance on the market? Is it weekly? Monthly? I do monthly and I started to look at my overall hit/miss ratio.

So let’s take a look at the numbers:

Percursor - I had a HORRIBLE April. I basically lost 65% of what I had invested. It was an expensive lesson but one that I have fixed. So, I went into May still licking my battle wounds and although it was an overall down month for me, it was a successful month:

Stocks Bought/Stocks Sold (6/5)
Gains/Loss (1/4)
Net Return = -$84.10

Options Bought/Options Sold (43/41)
Gains/Loss (22/19)
Net Return = -$682.00

Spreads Expired (1)
Gains/Loss (0/1)
Net Return = -$490.00

I think the thing that sticks out the most is that I had more gains in the options, but they weren’t profitable enough to overcome the losses. I know that I did this with my RIMM call options that hit my target and I got out. However, I left some profit on the table. One reason is that I had a small amount of contracts, so I wanted to take my profit, and in that I am not upset about the trade. However, if I had set a trailing stop that was much tighter, I could have made more in this trade.

Also in May, I went to Draper UT to the Investools Corporate Headquarters in Mid-May. It was here where I really honed down my rules and trading style. Just as Neo saw the Matrix differently, I see the stock market differently now.

I get the privilege of presenting what I learned in Utah to the people in the Chattanooga User Group. What’s going to be really tough is to condense 3 days of knowledge into 1 to 1-1/2hr.

My Win/Loss Ratio (All-Time) is 53% (W) / 47% (L)

I am going to an Advanced Options workshop in Atlanta in the middle of this month. I’ll go back to Atlanta in September for an Advanced Technicals workshop. I would have really liked to have reversed these, but given the cost of travel, this is the cheapest way for me to go.

I’m looking for a great profitable June.

Today 2 things happened… The market hit a resistance level and bounced off of it and the Feds released their notes on their meeting. These two combined sent all 4 major markets (Dow, S&P500, NASDAQ, Russell) down for the second straight day.

My Trades:

Bidu (Put) - Worthless

CCJ (Call) - Stopped out with a profit

CNQR (Stock) - Stopped out with a loss

EWZ (Stock) - Down today, but remained above my stop. In fact, tightened the Stop some

JASO (Call) - Down today, but remained above my stop

MTB (Put) - Down Today and moved to the profitable side

OIH (put) - Down Today, recovered almost all of my losses up to this point. Set a Stop Loss

RIG (Put) - Down Today, Big Profit for me today, moved Stop Loss Twice to Lock In profits

VIP (Call) - Up Today, still one the losing side, but close to the break even point

Outlook: Based on today’s action, I am moving to short term Bearish in the Market, at least for the rest of the week. I doubt that given the holiday weekend, there will be much trading on Friday. Thursday, I imagine will be the heavier of the trading days. Not sure what I will looking to pick up tomorrow at opening bell.

I had a bad April, so far. I’ve lost 2/3rds of my account, but I have not given up. I have concede that part of the problem was that I had high levels of anxiety with other things in my life and that made me make some bad decisions. But now I am moving on.

So where am I now?

I’m not as extended as I once was, of course, part of this is because I have less in my account to work with. This is forcing me to make smarter decisions, okay, they may not be smarter, but they are there.

Right now, I am in

AMZN (call), BIDU (OTM put), LVS (Bear Call Spread), WM (call), XL (put), Zion (put), AFL (Call)

Thursday was not kind to me. AMZN didn’t have a good showing after earnings and dropped 3+ points. BIDU is still strong (this was only incase it nosed dived, the put was only $40), LVS has been showing one-day strength and the retreating. WM is coiling up… I am managing my Exit strategy daily on this one. XL and Zion has had some strong days this past week… if financials are at a bottom, then these are losing propositions.

I’m only down to being able to trade $100 right now because that’s all that is in my account. I need to have some position be profitable to free up some cash. There are some good and predictable action going on right now but I am missing it.

Options Expire tomorrow and this round of Options (both calls and puts) have hammered me into oblivion. I had somewhat of a decent account level (relative). However, a couple of my picks earlier this month worked against me and I did NOTHING to stop it. Why? I thought that “it would turn around” and “it HAS to retrace”. Nope. Now a couple THOUSAND dollars poorer, I am sitting here rubbing my last dollars together.

The plan? Learn from my mistakes.

The first problem is that I didn’t put ENOUGH credence into my own research. I kinda took some experts opinion, looked at the chart and said… “Yeah, that looks good enough” and BOOM. I was in…

Which brings me not Not Diversified  enough. Seems that I was trying to Short some financial and the Solar Stocks at a time when neither WANTED to be shorted. Oi! The big problem with the financials is that the two positions (LEH and MER) both moved together… so neither one of them did well. Actually, LEH did make some money but MER was a complete loss.

Then there was FSLR. Yeah… It’ll stop at 200. WRONG! It’s hanging out at 300 now. Complete Loss. Although I did make some money during the climb, I held onto the put because… I was stupid too.. Actually, it was a lack of Trading Plan for this position. No plan going in, No plan going out. Loss.

Now, I am keeping my portfolio alive with some Spreads right now. 2 expire on Friday for modest gains EBAY and SPY. Both are safe at this point. SPY has about a $1 worth of room and EBAY has about $1.50. Looks like the GOOG had good earning since it’s up 65 points shortly after hours.