Saturday, August 22, 2015

That Sinking Feeling: 50 - 20 Grade D for August

I count 50 winners 20 loser for the August option cycle. The count may be a bit off because the trades were fast and furious this past week. Overall, I gave back about 60% of my modest gains for calendar 2015, but am still up for the year. 

There were five weeks for this option cycle. One week was positive, three were bad, one was really bad. For the most part, I stayed with my mechanical stop loss levels. As losses began to pile up, I got out early on more than a few occassions. With the market closing on its lows, for the most part taking the losses early turned out to be better.

For new readers, I tend to sell puts and calls naked at the 10% probability line, which is way out of the money. If the underlying crosses the strike price, that is my stop loss level.

This month there was the AMZN earnings day disaster, and big losses in AAPL DIS. The capper was a monster loss in NFLX as I got whipsawed back and forth. As always, I tend to be very conservative:

Rule #1 Live to trade another day.

So I survived. I have a few positions still open. Some positives are a backratio put spread in IBB that is going green, as are some vertical put spreads in SPY. These tiny winners are like enjoying a snack while the ship is sinking, but some people did not get that much.

Some other traders are taking on a lot of risk, seeing this dip as an opportunity. I have learned the hard way that fast moving markets are not my friend, so I am not one of those people. I go the other way and tend to be extra cautious after taking big losses. Obviously, not cautious enough to avoid the carnage. That said, I will live to trade another day.

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