For the trading month ending with October expiration I have one small winner, three big losers. A bad month any way you slice it. That said, my primary tactic is selling naked puts (equivalent to covered calls deep in the money). When stocks fall quickly, what is usually a low risk, low reward trade can quickly turn into disaster.
SPY was down about 25% for this trading period. My trading account down about 2% on the short term trades that I post on this blog. I am sure there are a few traders that made big money this month. I am just as sure there are likely ten times as many traders that took huge hits, with some having lost everything due to margin calls, leverage and disregard for stops.
When I am in a bad streak, I tend to trade smaller, and take longer breaks from trading. This served me well this month. All four of my trades would have been profitable if I had held until expiration. However, the drawdowns would have been hellacious, and there is never a guarantee that holding on will provide a better result. There is always a chance of a game changing loss when selling naked puts and that is what a risk averse trader must avoid.
Gold is looking interesting in here. If GLD retests the lows at 72.5 that might be a place where I look to go long again.
It may also be an interesting time for stock pickers. When there are no earnings, I like to look at sales. Others have commented that they will look for a high cash position. In a land without credit, the company with cash can be king. I may be spending some time looking for stocks with strong sales numbers and strong balance sheets. If I buy any for the long term, I won't post the buys and sells in this blog, but may mention them in list format as stocks that I find to be interesting.
Enjoy the weekend.
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