Dec 17 -Trade Plan-

MIC

Yesterday did not go like planned. There was a an 80 point swing from high to low that caused a lot of whipsaw pain as we closed our trade.  They were quick and fills were a big issue. Incredibly annoying and a testament to why I am getting fed up with this trade type.  I am over it. There’s better ways to make money in this market.

We’ll still close the trade at a profit but nowhere like we expected.  It is what it is.  The market opened at 198-199 and proceeded to go right to 202 and then back down to 197.8 in full swoops.  Huge intraday moves.  Hard to defend against. It was a shit show trying to remove the trade as the market swung wildly and I wasn’t able to get good fills as per usual during high volatility swings.  Probably should have closed the trade earlier but overall it may end up being a wash having held over the weekend. We’ll see.   Glad to end this type of trading for good.  Not worth the 2-3% a month.  Moving on to SPY/TLT, Momentum, Anchor.

 ANCHOR

Anchor has performed so nicely during this down trend. My account from the highs to the lows of yesterday is only down about about 1%. I do use a bit of timing in how I go long on the equities. If market breadth and bullish percentages are trending down I’ll sell ATM puts as a replacement for my equity. So at about 206 I sold all my ES/F and RSP that were my longs and sold an equal amount of weekly ATM spy puts with lots of premium. This obviously protected me in the last downtrend. My account should have been down closer to 2.5% from the highs to the lows (half of the 5% down).  So yeah, the downtrend (208.5 to 197.6) has produced around a 1% loss in balance. Love it.  Takes 15 min of trading and a little monitoring and that’s it.   The strategy is a long equity based strategy so any uptick in the market will start producing profits again. Over time, protecting yourself from loss is the key to success. It equates to more efficient compounding.

The TLT/SPY pair trade is doing as expected but is currently down. I closed the TLT portion @ 0.19 and am left with the spy portion. I wasn’t able to roll the TLT in time and I am waiting a little to see if TLT will reverse. The chart below suggests it might be ready for reversal (hanging man candle stick, overbought RSI). Once it does, I’ll enter another spread to offset risk exposure in the spy portion.

 

Screen Shot 2014-12-17 at 9.26.13 AM

4 thoughts on “Dec 17 -Trade Plan-”

  1. Newbie alert! I’m a little puzzled as to how selling your longs and selling short ATM puts protects you. If you removed your longs you should have no downside risk left. Shorting ATM puts adds risk back into your account. I’m probably missing something obvious.

    1. Ah wow Anchor trades 🙂 Been a long long while since I did those/looked at those.

      The idea was you’d buy enough protection by way of leap puts for your portfolio…then add another 30-40% so you’re at 130-140% long puts ATM 1 year out..then sell 30-40% every week in weekly puts so that the premium pays for the entire 140% of long puts you bought…you can get that all via http://www.steadyoptions.com

      I don’t trade anchor now. Solely stuff at the PMTT group.

    1. If you search old Reel Ken articles on seeking alpha he talks about it a lot as well.

      But there might be other better ways to obtain similar returns (check out http://www.smartallocatly.com) etc they have decent long term portfolios that are well protected.

      Though, I do believe I heard SO did a better version recently.

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