Monday, December 31, 2012

2012 year in review 101-27-3 grade B-

Overall modest gains, up 9.7% in my trading account. For closed trades, there were 101 winners, 27 losers, 3 breakeven trades for a 79% winning percentage. B- is my grade for the year. The letter grades are new for this year and I like the concept. 

While critics might say that 9% trails the gains in SPY, IWM and EEM, I trade more than stocks, and also go long and short. I'll take 9% year-in-year out, especially because I believe I am at a lower risk level than many other investors and traders.

Select ETFs:
SPY +13.5% TLT -0.1% GLD +6.6%
SLV +9.0% EEM +16.9% IWM 14.3%

Best trade of the year measured by the margin required, were short puts on EWG, the German stock ETF during the summer crisis time. Made 80% vs. my margin required. Other traders other brokers may have higher or lower margin requirements. Novices are going to tend to have higher requirements, advanced and pro traders often lower. Worst trade was short Iron Condors on AAPL Apple computer, lost like 500% basis the premium collected on the bad leg. Other 2012 winners were monthly rounds of selling puts on LGF Lions Gate, and BRKB Berkshire Hathaway, and some short strangles on IWM. Some other losers include GDX, ALXN, WFM, MMM. Other winners include GLD, XRT, AMZN, IBM.

The win percentage is about as expected. 79% winners would be extraordinary if I were doing straight coin-flip 50/50 up or down trades, but I often take trades at 80% probability or better.

Some notable events include: moving my retirement accounts to Schwab and attending a bunch of their free live presentations. Many are aimed at beginners, but I still managed to find some nugget in almost every presentation. I started going to some local stock market meetups. The local CANSLIM group is often interesting. It seems difficult to find stock market groups, so even though the momentum style favored by CANSLIM is not my strong suit, I find value in the occasional CANSLIM meeting. I don't advertise my blog at the meetup, nor do I talk much about my own picks, mostly I listen and try to learn something.

I continue to view online webinars presented by my other broker ThinkorSwim. In particular, their one-hour weekly market wrap up is something that I try to watch every week. Non-customers can register and view the wrap up for free. Some of the material is filler, some is same-old, same-old, especially for weekly viewers, but I almost always find something of value.

With classes, with presentations, with indicators, with methods and strategies, a few folks have unrealistic expectations, believing in some kind of holy grail. Nothing is 100%. Nothing. If something is 100%, it tends to stop working as soon as it gets found and published. The ThinkorSwim folks often remark, that they are looking at the pot odds (poker term), or that they have seen a lot of movies so have a good idea how this movie is going to end. That doesn't mean they don't get it wrong, but their experience gives them a better idea. Journaling is one way to avoid making the same mistakes over and over, and something I highly recommend.

During 2012 I ventured into some more exotic option trades. Naked strangles became routine, I did a single short Iron Condor (which turned into my biggest loser for the year). Delta neutral is another term and it means that a position makes money on time decay as long as the underlying remains in a range. Many pro traders use delta neutral strategies such as short Iron Condors and short straddles, and short strangles. For those that want to learn more about options, the CBOE link (Chicago Board of Options Exchange) is a good place to start learning.

I see that my first blog post from 2006 has sometimes been on the most popular list lately. Back then, I was mostly doing buy/writes and taking some small trading positions. I have learned so much by doing this blog and evolved so much during what is now close to seven years of blogging. Making my trades public makes me far less likely to do what some might characterize as “stupid trades.” I started in the stock market in August 1987, a few months before the 1987 stock market crash. That trial by fire has made me a relatively cautious trader. 

Again, let me restate, that I do this blog mostly for my own benefit. I also that hope that some others might learn from my trades and observations. Surprising as it may be to some, I have nothing to sell, nothing to advertise, nothing to gain from my blogging.

Friday, December 28, 2012

Buy XRT (sell puts)

Buy XRT via selling Jan 57 puts
XRT is the retail stock ETF. Chart support at 58. I wish I could say I bought the low of the day, but that virtually never happens, especially with orders placed before the open. 

I was surprised by the steep selloff. However, I am way underexposed due to my busy schedule. Hopefully, I will have more time to trade and blog.


Thursday, December 27, 2012

Buy APC (sell puts)

Buy APC via selling Jan 65 puts. Anadarko is the top holding in FRAK, an ETF play on oil fracking. I have played it before, and am coming back to it. 65 is chart support.


Friday, December 21, 2012

7-0 for December grade A-

Seven winners, zero losers for the December option cycle. All were small winners including a short strangle on IWM and short puts on BRKB, EWZ, LGF, TBT.

My schedule limited the time I could spend on the stock market. Going forward I have two small positions, short Jan IWM puts, and Mar LGF puts. I'll write a year in review a bit later in the year, as New Year's Day approaches.


Friday, December 07, 2012

Buy LGF (sell puts)

Buy LGF Lions Gate via selling Mar 14 puts

For the first time in a long time I placed some good-til-cancelled orders to sell options. I placed them on Sunday, and LGF got filled today. I had second order to sell IWM Russell 2000 puts and a third to sell GLD puts. I cancelled the GLD order on the big drop morning.