Yes, that is true. Only Wiki’s have unlimited editing, which my 2nd post has been turned into a Wiki. All other posts editing disappears pretty quickly.
That’s a good shout - but then anyone can edit it, right?
Hey @Pipstradamus,how do we get around this, im curious to have the initial posts open to unlimited editing for the OP only?
Especially if it’s kept as an up to date context or up to date overview?
Based on some very intriguing studies doing regarding adjusting capital usage and delta positioning based on IVR, I have decided to make some adjustments to my trading plan. I believe these changes will help continue to push my strategy to generate more profits and reduced risk.
Options Trading Rules
- Dynamic positioning based on IVR
- If IVR less than 30 then use 0.3x maximum leverage at 10 delta
- If IVR is between 30 and 50 then use 0.6x maximum leverage at 20 delta
- If IVR is greater than 50 then use 1x maximum leverage at 30 delta
- Close a position or roll to next expiration when...
- There are 14DTE left in the position
- 50% of profit has been achieved
- Roll positions up/down and out in time when they are tested
- Only roll a position that is being tested at its break-even
- When defensively rolling try to reduce delta's to at least 30
- Order of defensive rolling:
- 1) Roll to straddle
- 2) Roll out to next expiration
- 3) Roll into inverted strangle
- 4) Initiate an entirely new position or close altogether (depending on current IVR)
- Once a position has been defensively rolled inverted, if it is tested again, initiate an entirely new position that is a standard 16-30 delta strangle or close altogether if the IVR is too low.
- No single correlation group of more than 1x account size
- Target 0.2% of account value in positive theta
- Only sell options in highly liquid markets. Ideally 1 cent spread per $100 of underlying
- Use options to adjust delta's in high IV environments and static delta's in low IV environments
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@anon46773462 I wanted to pick your brain on today’s price action in the markets. I don’t know how closely you follow the major market indices, but today the market’s sold off pretty good into the close. The Nasdaq especially so.
Here is the interesting thing, the market’s tumbled into the close, yet my buy-and-holds actually rocketed up into the close. I think I figured out why. Today Marco Rubio tweeted about a bill to hit buybacks with the same tax treatment as dividends. I think it will have bipartisan support and pass without effort, because honestly Americans are sick of mega corporations laying off workers, suppressing wages, and then taking that cash and plowing it into buybacks to enrich the shareholders. Long story short, I just don’t think it will have any problem becoming law.
All of my buy-and-hold stocks are companies with high dividend yield (they all range from 5-7% yield). Tech stocks and small caps tend to favor buybacks over dividends. The Nasdaq is a tech heaving index with a lot of small caps. Putting it all together it seems like the reason why the markets(and Nasdaq in particular) tumbled, but all of my holding ended way up, is because there is a big rotation in cash from buyout stocks to dividend stocks.
I am also short the nasdaq while simultaneously long these high dividend stocks, which turned out to be a double whammy today. Once of my most profitable days so far this year.
I am curious if you are following this and what your thoughts are.
Your post notification popped up in my email since you included my Username.
I have not been following this thread and I am curious why you would suddenly ask me this? Maybe you put my name in there by mistake? If so, sorry to intrude.
You ask a question but also answer it and I think your answer is very logical and probably relevant to the market moves you mention. And the wisdom of your logic seems to be underscored by the profitability of your open positions.
However, one day’s results do not by themselves prove or disprove anything, nor do structural changes, such as those you suggest concerning possible legislation affecting buybacks, exhaust themselves in one day’s trading. But you appear to have identified a possible structural change that could have been approached from a number of angles - and, if I have understood your current portfolio correctly, you have put on a wise combination of long specific stocks and short the index in question (Nasdaq).
I have been long S&P since Jan on a personal non-trading “hold” investment, but the energy sector is possibly going to outperform the index. This was a good read:
Congrats on a good day’s result and I wish you well with your portfolio 
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Thanks for the response. I tagged because you are one of the few people here who follows the market’s closely.
I was throwing out my little thesis but wanted to know your thoughts as well. And I appreciate you offering your thoughts on it.
There may be a different dynamic at play that I am not aware of, or it may have been just a 1 day blip that doesn’t lend to a structural change.
I got long in late December, after the market had bottomed, but I jumped out way too early. Good luck on the long S&P position. Based on the charts that means you have been rocking it!
Ok. Thanks. Being EU based I don’t really have a natural reason for following individual companies in the US. I follow the overall market direction in the US and the Fed’s policies, as well as the dollar and general economic condition. But that is as specific as I get! 
Well its a modest investment and quite late after the initial big turnaround, but I am happy with it so far. Actually I am watching the market to day to see where we close with respect to the daily 200SMA that we currently straddling!
It was a good entry technically - at least on my daily model - I just wish I had caught that bounce off the Weekly 200SMA (green dotted) end December!:
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Still though, good on ya! I bought in at around 2,500. Stupid me jumped out way too early. I could be up 15% otherwise. Anyways, shoulda, coulda, woulda. I learned my lesson.
Market’s are still is a dicey spot though. The current price action is close to matching dot-com-boom price action where it dropped, then massive recovery, then the bottom fell out. I personally don’t think that will play out, but bounces, even really big ones, can be deceiving.
I noticed the NASDAQ dumped hard into the opening bell this morning. Bell just rang about 5 minutes ago and it continues to dump hard. This is all very interesting and I am going to be watching it closely.
We got our first real blizzard of the season. Thankfully the blizzard season is coming to an end because I probably can't handle much more of this. Here is me shoveling the pathway to our door for the 4th time this year. This time around the drifts are 6"-8" high.
Without further ado
For those of you who were willing to read to the end of the post, I do have a trading related update. I have not posted any updates to my trading account for about 3 weeks. The reason for that is because I am going to be changing to once per month updates. Weekly movements in my portfolio, while sometimes fun to watch, are fairly meaningless. I sell option premium on 30 day cycles (I sell them at around 60-45 DTE and buy them back at around 14 DTE). The remainder of my portfolio is long-term buy and hold positions that will gyrate up and down for many years to come.
Arguably, even monthly updates are fairly meaningless, but that wouldn't make for a very exciting blog if I only posted an update once a year, so I will stick to monthly account updates. In between I will still try to post about potential trade setups or new positions I have initiated, and try to do that at least a few times a week.
With only 1 week left in February that means my next account update will be next week. See you then!
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Going for the Gold (and Silver)
Performance:
YTD P&L: -2%
Changes this month
The big changes the month was the additional of 3 precious metal miners to my portfolio as well as a roll of my short QQQ strangle and a bear put spread spread on /6EM9. I have also increase the capital of my account by almost 150%.
Important Note
My unrealized P&L YTD numbers are not showing correctly. I am down -$1000 but it is showing a value of almost -$1,500. That is because after the market's close the futures options spreads get gigantic so over the weekend those positions will show massive unrealized losses. When the futures markets open on Sunday those spreads will tighten and my unrealized P&L be normal again. I will try to remember to take my account screenshots before market's close on Friday.
Adding the miners
This last month I have added silver and gold miners that now comprise about 30% of my total portfolio value, which is the percentage that I had been hoping to achieve. When looking for miners to invest in I was looking for them to have at least 2 or more of the following characteristic.
- Silver output is at least 50% of total output
- Low to no debt
- Large cash pile on hand
- AISC below the industry average
- Annual output is growing, not declining
- Mid-sized
These characteristics are designed to find miners that have nice leverage to the metals, but not be completely wiped out if metals carve out a new low in the future. With those characteristics above I had a difficult time finding even 3 miners that fit the bill. Most small/mid-sized miners in general and particularly silver miners are in rough shape. I was able to identify at least 3 miners that fit 2 or more of the above criteria.
Pan America Silver (PAAS): This was the easiest choice to make of the 3. This month it became the worlds largest primary silver produce when it acquired Tahoe Resources. They are a low debt company with a solid amount of cash-on-hand and a low AISC producer. If there is a new lower low hiding out there in silver prices I could see PAAS buying up other distressed silver miners in a fire sale, further strengthening the company.
First Majestic Silver (AG): This silver miner is a bit more risky in that it doesn't have a tremendous amount of in-ground reserves left, but it has been aggressively exploring with some promising results. It also had one of the strongest quarters of the silver miners and is rapidly increasing it's production output. The have a weaker balance sheet than PAAS.
IAMGOLD (IAG): This is primarily a gold producer. What I like about them is that they have a fairly low AISC, a decent balance sheet and tons of growth potential. This stock gives me a little bit of diversity so I am not too bound to silver prices, since I consider silver more of an industrial play.
Overall
Overall I like the prospects of silver. Silver supply has been dropping for a number of years and with silver down around the $13-$15 range the supply could really start falling off the map. While demand is also down slightly, the drop in supply has matches or exceeded that causing a continued deficit. I think there is a definite possibility of price retesting recent lows or even potentially carving out one more new low, although I don't think those levels will last.
I am fully aware of the volatility of small/mid tier and particularly silver miners. In terms of probability I think there could be a 20-30% drop in the miners still hiding out there. I am accepting that possibility in the short term for the much larger long term potential. This is all a play on the GSCI cyclical low trade, so getting my portfolio heavy on a number of commodity revolves around this. Once the GSCI vs. SP500 swings the other way, I would plan on shifting some of my holdings away from commodities and back to technology, healthcare, defensive, etc.
Short Premium Roll
Last month I rolled my short QQQ strangle to the next monthly expiration since the current position was nearing 14 DTE. I was able to roll for a credit. Per my rules I will roll all short premium positions nearing the 14 DTE to reduce gamma risk. This new position is 2 short calls at 178 and 1 short put at 161, with break evens at 181 and 156.
Bear Put Spread
An inside bar/pin bar fake out formation occurred on /6EM9 Euro-Dollar futures. This formation occurred right at the 50% retracement of the last swing high.. These types of patterns, when forming with the prevailing trend, can be very powerful. There are 2 ways to trade these, waiting for a break of the mother candlestick or the more risky waiting for at least a 50% retracement of the pin bar. I opted for a retracement entry and chose to enter at the high of the mother/child candle range. Price did push up to the high of the mother/child candle, I entered short, and price immediately began to drop. Price closed out the day as a second pin bar, so the pattern is now an even more rare inside bar/double pin bar fake out. My risk is somewhere around the 0.25-0.5% and I am aiming for a profit of around 2%. I will be waiting for this setup to resolve, one way or the other, early next week. I may post more detailed analysis about it in a separate post.
Looking Forward
Overall I am pleased with the composition of my portfolio now. I have a good mixture of buy-and-holds which comprise of energy, defensive, precious metals, and healthcare. None of these categories are larger than 30% of my total portfolio value. My plan is to continue to sell options premium, made candlestick pattern trades, and overall keep things diversified to help reduce risk.
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Big Portfolio Changes Are Coming
Performance:
YTD P&L: -0.8%
General Comments
In the past week I was able to recover most of my losses for the year. There were two primary reasons for this. The first is that my mining stocks had a good run up. The second reason was due to a really nice short on the EURUSD. I was up 1.2% on the week which puts my YTD P&L loss at less than 1%. I am basically 1 trade away from being back in the green for the year.
The Big Changes
This past month life happened and we ran into a very sudden and unexpected medical emergency. Without going into too many details, there was a surgery that was involved and a very large medical bill that will follow. Due to this need, I had to go in an liquidate almost all of my stock positions. I will likely need to withdraw somewhere between 50-65% of my account. Once these bills are taken care of I will begin refunding my account, and should have it back to where it was within a few months. What that means is that I will not be able to test my 3 prong portfolio (stocks, options selling, candlestick trading), since I had determined it takes a minimum of $50,000 to be able to run that kind of portfolio. I have actually come to believe it would take closer to $100,000 to $150,000 to properly diversify the way I would like
What that means is that with the remaining capital I am going to be switching to an option selling and candlestick trading only portfolio. This actually doesn't bother me at all since options selling and candlestick trading is much more in my wheelhouse than stock picking.
Future Blog Posts
This change means the nature of my blog posts will change. Since I will no longer be doing the 3 prong portfolio, I have decided to begin a candlestick study. With the study I will be tracking candlestick trades I take and looking at a large number of metrics for each trade. I hope to then aggregate that data and hopefully improve my trading performance. Out of stock picking, option selling and candlestick trading, I have been candlestick trading much longer than the others. For that reason I am very excited to do this study.
My blog posts going forward will then be a lot more focused on candlestick/price action trading and posting trade analysis. I also still plan on doing monthly portfolio updates, but again, this will focus much more on short term options and candlestick trades. For many of you TA traders that follow my posts, you will find this much more interesting.
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This is gold from veteran trader Peter Brandt. I need to re-read this, digest what is being said, and see what can be applied to my own trading.
https://www.peterlbrandt.com/understanding-trading-outcomes/
USO / OIL / CL - Inside Bar / Pin Bar Fake Out
Trade #1 of my candlestick trading study. Just closed out 50% of the trade for TP#1. SL have been moved up and final TP level in the 60-61 range.
USO / OIL / CL - Bullish Double Pin Bar From Support
Trade #3 of my candlestick trading study. Just closed out 50% of the trade for TP#1. SL have been moved up and final TP level in the 60-61 range.
On both daily and hourly trades, closed the last 50% at $58.90 due to bearish price action that had formed intra day, in addition to bearish price action in SPY (which /CL has a decent correlation to right now). I will normally let a trade run and either hit TP levels or stop loss, but if I see convincing price action that is counter to my trade, I may close manually, as I did here.
Current charts throwing good price action signals
SI - Short
NZDUSD -Short
AUDUSD -Short
DXY - Long
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