OctWk2 - SPY Market Summary

OctWk2 - SPY Market Summary

What a week! Take a look at the charts and see that wonderful reversal. Was there a US governmental shutdown? Or did the market retraced after hearing some good news? It just doesn't make sense, the bad news is still there, the deadlock is still there, but the markets seem to be buoyant, and for no good reason other than Dr B giving everyone more money.

Maybe that is a reason for rejoicing. Whatever. A look at the chart above, and you would see that price was a bearish marubozu and pierced the cloud. It is important that price closed into the cloud. This just means that price will be going sideways henceforth. But wait! The price movement for the next day was a doji formation, and once you correlate that to the candle the day before, it sounds like the sellers are running out of steam. The buyers are coming in and taking over? Maybe not.

And the next day, price shoots up to the sky. Looking back at the Chikou Span, and you will understand that the top of the cloud forms a significant resistance. And as such price didn't have the strength to push through it. Thus it naturally had to rebound. That rebound is so fantastic that it is now officially bullish.

This is where I come in and make history. :)

I sold a SPY Put Spread at $160/161 for a premium of $0.05 and pocketed an return on investment of 2.95%. I wish the markets was like this every week.

Education - My Psychology for Options Trading

My Psychology for Options Trading

It is always good to take stock of my trading psychology from the time I started options trading until now. I must say that I am grateful and thankful for the people that I have come across that have taught me how to trade options in the most efficient and practical way, and I must that it works.

The way I have been trading options is probably one of the most boring ways to do any form of investment. I usually go for very safe trades, and if I have taken your premium, I am unlikely to give it back to you.

I have been doing weekly options and I have gone through from greed to impatience to fear. The entire gamut of trading psychology that every newbie trader would go through. I won't dare to say that I have arrived at the ideological state of being a master, but I will say that I have a system in place that would make me a rich man - just as long as I stay within the rules of the system that I have created for myself.

Options trading at the very core of it, is a numbers game, and it is all about probabilities and there is some maths involved. If you're a novice trader without any pre-knowledge of how to invest, then my suggestion is that you get yourself trained for the basics of options trading before you start trading.

Once you have completed your basic training, it is time to demo trade and then finally when you're sure of your strategies, you can start putting in real money. I have invested quite a lot of money, and I have lost quite a lot as well. But I am slowly building my way back to where I left off.

I am leaner, more experienced, and I am ready to play the game according to the rules.

OctWk1 - SPY Market Summary

OctWk1 - SPY Market Summary

The market looks promising, and I thought that I would venture out another trade since I was still in the game. I was looking for another trade, and honestly the only way forward is to take a risk and hunt for a trade.

Most of my peers were unable to locate or find a possible entry, but for me, it was like a clockwork-orange. Not to brag, but, nothing was as simple as the trade for OctWk1 for SPY. The decision was as clear as day, and I took an opportunity to sell the trade on Thursday.

I applied the same strategy as I had always applied, and that was the contingent on spread price reaching the cut loss spread price. Thankfully it didn't and I managed to bag the premium earned for that trade.

I sold a Put Spread for the SPY for $164.5/$165.5 for a premium of $0.06 on Thursday and then applied the same contingent order if price was less than $165.70.

Of course price went nowhere near that, and the trade expired worthless. The real return on investment for that trade was 3.95%. Sweet.

SepWk4 - GLD instead of SPY

SepWk4 - GLD instead of SPY

I had wanted to sell a trade on the SPY, given that the markets were pretty conducive for a SPY trade. The charts above showed great promise, but somehow, it didn't really work out for me this week. And so..

I sold a trade on GLD call spread, $130.5/131.5 for a premium of $0.05 and it expired worthless on Friday giving me a real return on investment of 2.95%.

It's not much, but it was more than what I had expected and is expecting these days when it comes to options investing. I am prudent, and my goal and intention is to make back the money that I had lost.

SepWK2 - SPY Market Summary

SepWk2 - SPY Market Summary

The good thing about weekly options is that you don't need to be an expert and yet you can make pretty decent premium income if you manage your trades well enough. I am not kidding. I have been doing this weekly options thing since 2011, and admittedly if I do it well and safe enough, I can make decent income from this.

My biggest problem is probably psychology. I am greedy, fearful and impatient. That has been my downfall. Ignoring the rules that I set up for myself is my second biggest problem.

But imagine the potential if I am able to restrain myself and control my psychology, wouldn't that be powerful.

Alright, enough about my journey. Let's take a look at the SPY market movement yesterday and in a wider sense, the week past. Trading has been choppy with market moving sideways. Not too bad as you can see above that price has been testing the support given by the cloud (kumo) and that has proven to be a strong support for price.

Subsequently price has moved upwards as sellers got tired, and the bulls came in. Current price has risen above the Tenkan Sen and the Kijun Sen trend lines, so that is a bullish sign. The Tenkan Sen and Kijun Sen is about to have a crossover, so that's a reversal signal that prices are going up. Price has broken through the upper resistance of the cloud and that just means bullish as well. It is also good to note that the Chikou Span is also about to intersect historical price, that just means more upside to the SPY. :)

That said, I sold a Call Spread for the SPY for $171/172 for a premium of $0.05. Option expired worthless last night (SG Time). Woke up this morning with ROI 2.95%.

Nice.

AugWk5 - SPY Market Summary

AugWk5 - SPY Market Summary

Taking a look at the market close yesterday, all I can say is that the market's performed to the tune nicely. All I can say is that I am happy that my trade expired worthless, the premium collected is safely in the pocket. :)

I sold the SPY Put Spread $161.5/162.5 for the premium of $0.05 and the option expired worthless and I collected an ROI of 2.95%.

Not too bad considering that it was quite a choppy week. As you can see the daily candles are bouncing off the bottom of the Kumo (see chart above), and it has been testing the support. So far so good? Maybe, but I won't be surprised if the markets are going to be ranging for the next week.

Perhaps it is a good thing, or maybe it isn't. Who knows. :)

On another note, I am actually thinking of adopting a strangle strategy for a safer trade. I heard that there are some folks selling naked calls and puts but into the longer expiration cycles. Maybe that might be something to consider?

The SPY's performance on Friday 30 August 2013 was exactly what it was - uneventful. Except for that dip at about 1.15pm (US time), and the dip again at market closing 3.45pm (US time). But all said and done my contingent on price is intact, and I went to bed not bothering about it. :)

I am using Yahoo Finance's SPY interactive chart (it rocks!) and using the "mountain" setting to trace the movements with a combination of bollinger bands and parabolic SAR (Stop And Reverse). I think these indicators are fabulous. They really help me understand the markets a little better. Of course if Yahoo Finance is able to include the Ichimoku Kinko Hyo indicator in their charts, then that would be pretty fine as well. :)

It kind of looks cluttered with all the drawings and all, but if you know how each indicator is suppose to behave, then it would all make sense. Just that without the ichimoku's support and resistance lines, it might be hard to see where price is going. Oh well. :) 

I made money this week, and I am happy.

JuneWk3 - SPY Market Summary

JuneWk3 - SPY Market Summary - This week's movement marks the end of the bull run for sure. The movement on Thursday basically pierced through the Kumo, and essentially that has made things clearer for most of us. The ichimoku indicators just makes it so simple to see where the market is going and probably gonna go in the weeks to come.

It's definitely bearish from here on.

So I decided that I would enter into the market on Friday. Taking into account the trend for the week, it is likely that the market would sort of stabilize a little since there is a big support line that is the Kumo protecting it.

I sold a SPY Put Spread at $156/157 for a premium of $0.11 and placed a contingent order on price less than $157.10. The good news was the SPY went upwards and ended $159.07.

My trade expired worthless. I noticed something recently regarding my trades and that I have been greedy. In a way, I am trending on gambling as opposed to investing. However, if I don't take the risk, I would not be able to increase my profits.