This past Friday was the commodity options expiration week. So far my grains options stopped bleeding. I had only three rollover of wheat lost about $3.2K but made up by future premium credit for the time being. Not counting this rollover this is a $2.3K profitable week. This week's profit mainly came from bear call hedging, VIX and ES. I earned it the hard way: using many small wins to cover bigger losses. The result of not taking stops according to my rules of stop loses.
I also made some roll downs in Dec grains to lock in partial profits during this consolidation period. I am improving my trading techniques in small steps.
The key lesson of this week is still risk control in a different prospect. Hedging is part of risk control. Couple weeks ago the grains futures were crashing liked the end of the world. I bought many puts to hedge my losing positions. Especially for corn I was totally in puts for the next 3 months. It looked so bearish that I was certain these puts would pay off a large portion of my losses at least. The thought of hedging did come cross my mind but I didn't form any action plan until the WASDE on Aug 12 without another sell off. It approved that there is no 100% certainty in trading, only probability. Therefore hedging risk must be a part of position. When ever I am so sure about the market direction and my positions it's the time to hedge my "certainty". Since there is no certainty in trading before a position is closed the rules of taking profit and stop loss need to be followed strictly. Buffet's rule of "never lose money" should not be considered in one trade, but a strategy and a portfolio.
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