EDIT: At the time this blog entry was posted I had a Youtube video here. That has been removed but I want the rest of my content to be remain. Nothing hidden no past mistakes ignored. All out in the open.
Investing and Trading Account: $7,136.19
Total Return: -0.19%
Est Monthly Income: $11.48 / month
Trading: $3,472.00
Total Return: -2.2%
1 SPY 152 May PUT: -13.85%
Cash: $2,987
Investing: $3,664.19
Total Return: 1.78%
Stock
AFL: +0.21%
HAS: +2.31%
SPLS: +12.49%
STX: +10.54%
Energy
WHZ: +4.4%
Gold
IAU: -0.25%
Bonds
BLV: -3.08%
JNK: -1.12%
PCY: -2.5%
Cash: $1,190.15
ETF Account: $7,155.49
Total Return: -0.17%
Est Monthly Income: $14.15
US Stock
SPY: +1.99%
XLV: +2.54%
VNQ: +0.82%
International Stock
EWZ: 0.42%%
PXR: 0.34%
Gold
IAU: -1.04%
Bonds
BLV: -3.01%
JNK: -1.48%
PCY: -2.37%
Cash
Cash: $2,013.44
Permanent Portfolio: $7,140.16
Total Return: -0.14%
Est Monthly Withdraw Rate (4% rule): $21.68
Listed by weighting
SPY: 25.42%
GLD: 24.87%
TLT: 24.27%
Cash: 25.43%
I had a question about the risk management of the SPY Put trade. The SPY Put was purchased for $563, if the market keeps rallying and you lose on the trade, that would be a 16.2% loss to the trading account, or a 7.9% loss to the trading and investing account as a whole. Can you comment on your risk management and tolerance regarding this trade? It seems like a very large risk to take relative to the size of the account.
ReplyDeleteThanks!
Good observation and I'll probably have a separate entry as this being one of the first trades I have yet to go over my thoughts on managing it.
DeleteIf things start going up to say 153 I'll probably bail. This trade was part sequestration, part resistance of SPY 150, and part "we-havent-had-a-pullback-in-awhile". I suppose that is a lot less technical then Aileron LOL.
But we've been stuck for 2 weeks now between 149-151 going nowhere after a big January rise.
I had not really considered buying options before because I was overly worried about theta decay and a drop in volatility, but after seeing you put it on and thinking about it, I like it more. What I like about it is the more the trade goes in your favor, the more delta, the more it goes against you, the less delta. It creates an exponential curve of value growth as the trade goes more and more in your favor, and just the opposite as it goes against you. I will definitely consider these types of trades more.
ReplyDelete"the more the trade goes in your favor, the more delta, the more it goes against you, the less delta. It creates an exponential curve of value growth as the trade goes more and more in your favor, and just the opposite as it goes against you."
DeleteEXACTLY. Losing money in a trade is rough but at least this helps out. Theta decay is a concern but that is why I got a May contract. Cost more but whenever I go to sell I should keep more then if I went with a March contract.