Monthly Review 2-28-15

My plan of deleverage and retreat from grains has finally paid off. Feb realized gain is $19.7K vs Jan break even. It's a good start of recovering and still has a long way to go. The key lessons are the same: 1. manage risk begins before entry; 2. Be patience and disciplined.  

I have been reformulating my indices options selling program, gradually adding Karen's style trading to my portfolio. My plan is eventually switch majority of  my trading portfolio to Karen's style which will spread out my holdings to a longer period with evenly distributed incomes. My mindset for entry has not completely switch to such style yet. It shows on entry selection not giving enough considerations in the DTE. For example, It's likely for indices to retread 10-15% in 45-56 days in 3-4 times a year. I may not have enough room to fend off such type of correction especially if my entries were done during a low volatile period. I need to do more thinking and study for such scenario. In theory 3-4 times losses per year could wipe out my entire year's gain. I need to have a plan for the worst case scenario. Would it be safer if I change my trading approach back to sell short term (20-30 days) first, then add Karen's style only during the volatile period which I can get more premiums and far OTM. Also maintain my leverage level at or below 1.5 which means to use 50% of my margin.

Grains stayed in consolidation most of time during this month. I am still exposed to losses in wheat. It may last until this summer. I will stay out of soybean trading due to the leverage/return ratio.

March may be a different market than Feb. I will spend some time to study March Madness effect. Grains may be more active as well.

Building A Range 2-27-15

My plan:

Indices stayed in range overnight. ES is building a range of 2115-2102. We may see a range day on this Friday of month end. Bulls are still in control. My plan is the same as yesterday. Try to sell at both edges.

Grains pulled up some. Corn and wheat are forming a IHS in 120m bars. I may add couple of corn bear calls since I don't have any and it's free margin. The rest is just wait for decay.

My execution:

Indices had a lower high pull back after testing the upper trend line. ES/SPX closed within current balance area. ES tested yesterday's low of 2101.5.
Sold RUT April 3 1060 for $2.05. Karen style.
Sold ES April 1 1850 for 2.2. My 30 day range set up.

This week closed with a modest win of $700 and no stop out.

Corn and wheat played out their IHS beautifully today. Wheat and corn closed 2.5% and 1.2 % respectively. No trade today.
 

Now What? 2-25-15

My plan:

The overnight session held up similar to the night before. The new high is holding up well. However, it seams the bulls are unable to expand its up push so far. We may see a pull back to the seen of crime. My plan is to sell put on pull back.

Grains moved lower. Wheat is at 5.00 again. Corn is at the edge of HVA of 375. I didn't expect this down move based on seasonality. I will wait and watch.

My execution:

No new trade in any market. ES/SPX had a small sell off after reaching a new high of 2117. It's closed back into yesterday's range. We may get a small pull back in the next couple days if indices can't make new highs

Wheat closed below $5 market and hanging on the edge of CHVA. The key to watch is if the retest early Feb low of 490 would hold. Corn closed back to its CHVA. The test of 371 was rejected at closing.

Waiting Mode 2-24-15

My plan:

Indices futures held up at top and compressed. Yellen's testify in Congress will end today. No change of her dovish view is expected. EU may release news regarding Greek proposal as well. Indices have more upside to go. My plan is the same as yesterday: manage my risk on calls and sell puts on any meaningful pull backs.

Corn and wheat still in the down trends on 120m chart. I don't have a whole lot to do but let time decay.

I plan to study some leveraged indices options to see if any of them will fit my trading.

SPX and RUT made new high again today. It appears the grind up is still going. No trade in this front today. Corn and wheat made attempts to recover yesterday's loss. They both closed at yesterday's lows. No trade in this front either.

My patience is being stretched very thin now. Holding on my time to come.

Waiting for Greek Proposal 2-23-15

My plan:

Indices futures held up in a bull flag pattern. The market is awaiting for Greek's proposal to get EU approval. Also, Chair Janet Yellen will testify in Congress at 10AM. This would be a bigger event.  ES could push to a new high or retest the scene of crime around 2090. My plan is to sell puts for later March and early April.

Corn and Wheat are still in down side. Soybean held up well. My plan is the same as before.

My execution:

No trades in indices today. It was an inside day. Any sell attempts were met by buyers. ES had on 7 point range and closed at high of last Friday. It looks ready for another push up if the Greek proposal gets approved. I am getting frustrated with no fills for several days now. I know my time will come and need to be patient.

Corn and wheat made new lows while soybean is holding up. A corn April 350 was filled with an early up tick.

Weekly Review 2-21-15

I had total of 70 trades as the monthly expiration week end. My earliest trade was back in last July 28 in grains. There were a lot of rolling, carrying and over trading. Luckily it ended in $15.5K recovering. I have reduced most of my positions in corn and soybean. The only trouble spot is in wheat which may make a new low according to the seasonal. I missed the opportunities to reverse my positions to bear calls and waved my plan of not adding to puts side.

Indices broke out to the up side last Friday. This break out has had a long period of consolidation which may make the break out sustainable. I need to prepare for possible stop out in my bear call positions. I missed most of add on in the puts side last week due to lack of meaningful pull backs.

Grains diverged between soybean, corn and wheat. My main threat is in wheat now. I may use any meaningful pop to roll over or reverse my bull puts.

No major errors were made this week. I will start recording any cost of my errors and fees in my trade records.

Next week, refrain from adding bear calls in indices and try to reduce them when I can. Risk management is still my No. 1 priority.

Greece in Play Again 2-20-15

My plan:

Greece's bail out proposal is on table for EU to discus.  There are discusses about continence plan for Greece to exit EU. Futures dropped on the news.  My plan is to use the pb to sell more puts. Today will be volatile since it's the monthly options expiration Friday.

Grains are in ranges on this expiration day. I may do couple rollovers in corn and wheat to reduce risk and size.

My execution:

Indices sold off after open on Greece concerns. It looked pretty serious, down 10 points in the first 30 min. I prepared several bull puts around S2, 2082 for ES but missed by a few ticks. Then a news of possible agreement with Greece took the market shoot up and never looked back. ES/SPX had a total outside reversal day. The new high at 2107 is firmly closed. I made couple SPY and SPX calls instead but were not very ideal. Interestingly RUT didn't break out but held high of the day. Get to watch out upside risk next week.

Grains went wild on this expiration day. Corn went down below 388 so I let my 400 calls to expire. Wheat dropped 13 points (2.5%) retesting the break out area. A new low is possible if the neck line of 500 in the IHS could not hold. Soybean pinned 1000 mark. I have no worry of soybean since I am light in it.

Bull or Bear? 2-19-15

My plan:

Bulls have been holding up in a small new high range for 5 days. But bulls nor bears have not been able to really break away. This situation may not last long. Overnight, ES popped on Greece debt proposal but got a clear rejection. It is moving lower after US jobless claim slightly higher than expectation. The ES down side levels are 2083, 2068 and above at 2099, then 2105.  I plan to sell puts on weakness on FOTM. It could be another range day since tomorrow is the monthly options expiration day.

Grains are still postured lower except soybean. Corn and wheat are in CHVA. My plan is still the same. I need to watch March wheat 515 put. It's currently 10 point away. Be ready to exit out.

My execution:

ES overnight high got sold off on jobless claim numbers and overnight low held after open. It looks like that buyers are still in control. I tried to sell on both side but no fill since there were no break out on each side. My GTC order to close SPY Feb 4 213.5 calls got filled right at open. This is the only trade I had in indices.

Grains continued their volatile explorations. Corn recovered its loss from yesterday. Wheat popped up after open and sold off partially at close. Soybean moved up as well. My wheat puts of 515 closed during the up swing. The only thing I have left is Corn 400 calls. It could get pinned tomorrow at expiration day. I must close it before lunch tomorrow.

Waiting for Greece? 2-18-15

My plan:

Indices stayed in yesterday's range but lowered before open. Market is still watching Greece closely. My plan is still watch the risk on call side and try to sell puts.

Grains are down sharply from the open. My plan remains the same as yesterday.

My execution:

No trade in indices. It was a inside day for ES/SPX. Market didn't move up or down enough to get me filled.

Grains moved down sharply. Corn and wheat tested their break out lows. We will tell in the next few days if it's an resumed down trend or the retest before moving up.

I will try again to take out couple threatened indices call spreads.

Melt Up 2-17-15

My plan:

Yesterday was Presidents Day. Futures market opened a half day and I had no trading actions. Greece debt negotiation is affecting the market with any news releases. Overnight futures dropped on Greece talk broken down and recovered on European econ data. ES, RUT are positioned to make new highs again. Would we see a sell off after a new high? It's possible but not likely happens immediately. My plan is to watch and manage my risks, especially on the bear call side. I should exit some threatened calls and recover from puts side or higher calls.

Grains moved up overnight, especially wheat has gained 9 points, 1.7%. I may add 1-2 cars from put side in wheat to make a bit recovery of sided contracts. Overall, my plan is still to reduce size and risk.

My execution:

SPX/RUT closed at new highs in a small range day. It looks like building energies for another push up. I closed this weeks' ES put and SPX call. Tried to close couple bear calls and spread but no fill.

Grains are getting volatile as the expiration near. They were pushed lower and recovered later in the session. I sold a Wheat April 500 put and reduced a May call size. Corn 400 call is near threatened. I will try to close it in next 2 days or roll over to next month.

Weekly Review 2-14-15

It was a week of improvements in emotions and practices. I traded much less in grains and adjusting indices to longer time frame. I am more patient in holding profitable positions and let them decay further. The week had a profit of $1.3K with all winners in indices options.

I started to post my daily trades on KST Yahoo group in order to make myself more accountable and honest.

Indices made new highs. What's more likely to happen next? A lot of talks about bobbles. Giving the over two months of building the base and thorough auctions it's likely the market explore the next trading range above. I am a little overloaded in RUT bear calls. I will manage and reduce my risk from the puts side.  

Next week is the monthly options expiration week. I will have more positions off from grains and indices. My trading is moving back into the basics, More risk control and simpler. The grains losses taught me a big lesson of greed and fear. Over confidence is the enemy of trading success.

S&P New High

My plan:

US indices futures held up overnight. German DAX made a new high in European session. SPS & RUT are ready to make new highs as well. The question is what's after it? Is the market going to float up like 2013 or sell off soon after a new high. It will show its hand early next week. I may need to change the way of my thinking on this trending market. Instead of picking the bear calls a safer approach may be selling bull puts for a little less premiums on intra-day pull backs. In which case the bull puts may decay fast if the up float continues for days and weeks. I will not sell calls today except adjusting my positions.

Grains pushing up slightly after open. the same plan for me.

My execution:

ES/SPX broke into new highs and stayed up. I didn't have any new positions, only closed SPX/SPY puts for next week.

Grains popped up across board. Wheat advanced most and closed at high of the current range. I didn't place any new trade and would rather let current ones decay for the Presidents weekend.

Break Out 2-12-15

My plan:

Indices futures made a large swing overnight. Now ES is parked at high (2074) of yesterday's closing. It looks like indices are moving to the next balance area if they can close above firmly for couple of days. Last all time highs may be challenged soon. Watching for possible double top and fighting there. My plan is to monitor risk on bear calls and add sell puts to make more strangles for March positions.

Grains are still range bound overnight. USDA export data released this am didn't cause any large moves. I will continue to reduce my sizes and risk.

My execution:

Equities moved up on Ukraine cease fire agreement and delayed decision for Greece debt, plus the technical setup. ES crossed 2081, the last CHVN. Now the new high is on sight. There are two possibilities on this challenge of new high: a sell off or a run up never look back. Be very cautious about adding new bear calls before a clear sign of exhausting. I had 2 sets of SPX Mar end 2190/2200 bear calls sold at $0,70. The set in Etrade was after cash closing. I wanted to have some premiums in my account so bad so I lowered my entry from 0.75 to 0.70. A bad habit and emotional driven act. I would rather miss it or may get a better file tomorrow.

Grains are still in range bound. I have 8 positions closed with one Soybean in May. The realized profit is $2200, a nice change of mood. I am watch the seasonality to adjust my positions accordingly.

Holding Up 2-11-15

My plan:

Indices futres held up at the edge of CHVA overnight. Market is building energy to challenge new high.
I will not sell calls other than adjusting my positions. I plan to sell puts on a meaningful pull back or failed up move. Beware of possible double top. I will sell from the far OTM/D first. Need to be more conservative in puts too.

Grains moved to yesterday's lows. Looks like they are retesting the seen of crime or further down if the lows won't hold. My plan is still the same: reduce size, manage risk.

My execution:

Equities followed yesterday's pattern: slow in the morning, shoot up before closing. Greece debt restructure negotiation is affecting the market. ES gave back most RTH gains after hour on Greece and Euro zone didn't reach an agreement as reported before close.  I sold one RUT and two SPX march puts to make them strangles. There is a possibility this break out may fail since every high has been sold off. It could be a topping process.

Grains held yesterday's lows across board but within the range. I did a May 460/625 risk reversal to lock in 50% profit and reduce margin of 1.3K. It's kind of meaningless to trade the same month and delta 1:1. No other positions got closed today.

Weekly Review 2-7-15

Indices had been up and down in the same balance area for the week. Market has had influences from Greece and Ukraine.  It was showing signs of break out to the upside on Friday. The tell may come early next week.

Grains bottomed out following their seasonality. I didn't have much activities other than closing some dried up positions and letting others decay more.

It was a profitable week of $1.4K. I made another error of key in an order without the minus sign. Also sold a SPY 209 bear call without following rules.

I need to firm up my entry rules to be less risky after learning from other KST members. For KST bull put in uptrend market with vol below 18, the rules of engagement should be:
For bull puts
1. the time frame is 45-60 days.
2. 17-20% ITM depending on contracts and 2 major support levels on weekly.
3. Premiums consideration is 2% or better of ROM. Otherwise just wait.
4. POTM should be 90% or better and remove STD as a major consideration.
5. Outside of weekly BB bands and Fib target.
6. Expand the entry level further out when the vol is above 18.

For bear calls
1. 10% ITM and above a major resistance level.
2. Outside of weekly BB band and Fib 23% target.
3. Enter 1/2-2/3 of bull puts size.

Plan to eliminate short term selling to improve my winning rate and reduce risk. It will make risk management much easier.

Break Away One Way or Another 2-10-15

QoD: A pessimist sees the difficulty in every opportunity. An optimist sees the opportunity in every difficulty.
  - Winston Churchill

My plan:

US indices played a come back overnight after a small sell off before closing yesterday. It has been a pattern of the last three trading days. The four hour bb band squeeze to the upside played out so far. The large balance of 1965-2070 for the last three month looks ready to break one way or another. It's more likely to the upside giving the long term uptrend intact. I would be cautious selling bear calls today unless a clearly failed break up. I will try to sell puts in far OTM on pull back. Keep in mind there is a possibility of break down with a possible HS formation.

Grains are awaiting USDA WASDE today at 12pm. I forgot to verify the date yesterday when I added the wheat bull put. I won't add any positions today and wait to see if there is a follow up one way or another tomorrow.

My execution:

The upside squeeze played out in the afternoon session. ES closed near the top of CHVA, 2066 again. It may break out this time baring any geopolitical news. I didn't have any new positions on either side. I didn't get filled any puts in early lower test and didn't want to sell calls before the break play out. I closed Feb 2,3 ES and RUT. I now have some armors for next round.

USDA report didn't cause any large swing in grains. I had only one wheat bear call of 620 closed. Corn had a bullish number on the ending stock. I will wait to see if there is any follow through tomorrow.

Choppy Markets 2-9-15

My plan:

I woke up later this morning. I didn't write down my plan.

My execution:

I took stop loss of SPY Feb 3 209 call this morning as planed. I have Feb 4 calls and puts to cover the losses. My Feb 2 RUT call and put got closed, so as SPY Puts for Feb 2 and 3. Feels good with adequate margin level. Many of my sell puts orders didn't get filled even during the afternoon sell off. I convince myself that I would have other opportunities to sell them at the price I want since most of my orders are 30 days out. I need to remember to conduct my morning plan even when I am late. It feels like shooting from the hip without planning.

Grains moved up a notch across the board. There was only one exit order filled in wheat. I sold one July 490 bull put for 1675 to collect some premiums.  I plan to roll it with 30-50% profit to void the seasonal down turn in July.

Moving to New Range 2-6-15

My plan:

Indices popped on better than expected US job report. ES and NQ are up on the edge of their CHVA. We may see a break out to the next trading range above 2065 for ES. Hypotheses two is indices may chop around 2060-83 area since there are couple of CHVN there. My plan is to manage my risky positions and add on put side if possible.

Yesterday, I totally forgot the job report was coming up. I was not suppose to trade before job report according to my trade plan. I over traded 4 bear calls.

Corn and wheat are holding their bull flag patterns. My plan is the same. I may add 1-2 bull puts in wheat since I had some cars left from last fall.

My execution:

Indices didn't move into the next balance area as my hypo 1 expected. Market may be concerned about Fed's rate move since the job picture is prettier. ES tested above the CHVA of 2065 and got a clear rejection. Market moved lower later session as trades were closing their positions on this monthly options expiration Friday. I only had one order filled for SPY Feb wk 4 190 put as part of recover for my call 209. I put in some RUT bull puts spreads but none of them filled. I compared QQQ margin and premiums. It's better than SPY. I may start to use it instead.

Grains explored the down side but recovered most before closing. My add on in wheat didn't get fill. I only had one bull puts risk reversal filled to improve my margin. Over all it was a frustrating day. However, the break out didn't happy in indices which may give me a better chance to exit SYP 209 next Monday with a little more time decay.

Try To Break Out Again 2-5-15

My plan:

Indices staged a come back overnight. Apparently yesterday afternoon's sell off was Greece related again. US indices futures were pushed up after European open. ES is back near yesterday's high and the upper trend line again before open. I plan to manage my bear call risk and exit mature puts.

Grains held overnight. I still think the lows are in for the near term. My plan is still to manage risk, reduce positions.

Getting up on time gives me time to prepare for my work. It feels good.

My execution:

ES opened up and only pulled back to yesterday's high. It closed above current down trend line and at high of last week. If ES/SPX close above current balance of CHVA we may see a start of new balance area. Current balance area has been thoroughly auctioned. RUT has a similar situation as SPX. It's closer to new high than SPX. However the weekly and daily BB bands are in a narrow squeeze mode. It may not have a whole lot to go for now. I sold RUT Mar 2, 3 bear calls spreads and SPX Mar 3 call spread. I closed ES 1850 this week  and SPY 180 call next week partial. I also sold Feb 27 SPY 213.5 calls to get ready for taking stop of Feb 20, 209 which is under water at 3x loss. I will try to sell another set of put to make a partial or full recovery. I should be more patient on the call side and limit my size too. A new break out usually have a lot more energy.

Grains broke out from yesterday's pull back. The lows are well set now. I didn't have any filled orders. I will start looking at adding bull puts tomorrow and reduce calls.  

Breaking the Down Channel? 2-4-15

My plan:

I realized that I have not formed a thorough process of analyzing the market in a bigger picture, especially during the trading session while I am busy looking to place orders. Example, I didn't notice that RUT and SPX are still in their current down channel. I need to clearly define my process of analyzing the market's bigger picture. Trend, MA, Fib levels, BB band, then volume profile during the day.

Indices futures held up in a small range overnight. ES is at the upper line of current down trend. I am watching to see if the first attempt gets sold off. I may sell some puts if we have a pull back to 20150-13 for ES and similar level for SPY. RUT has a little more upside to test the trend line. I will hold off selling calls for now.

Grains are pulling back from yesterday's big surge. I am considering to roll my Mar corn 400 bear calls. Over all, I am sticking to my plan of reducing size in grains. I will stop trading soybean after close my current positions.

My executions:

Indices pushed high for most of the session challenging their upper line area of the current down trend. Sellers came in the last hr pushed them to the new low of the session. So the down trend held for now. I sold 6 SPY Mar wk 3 for 39 filled after hr and one ES Mar wk1 at 3.30. RUT had less movement so none of my credit spread nor IWM got filled. I am considering adding QQQ, TLT into my trading after fading out of grains.

Grains pulled back somewhat. Soybean gave away most of gains from yesterday while corn and wheat held most of their gains. No trade in this front.

Turn Around Tuesday 2-3-15

My plan:

Indices followed up from yesterday's closing. ES is moving towards the mid of current balance area of 2038. It should tell us the bottom is completed if we close firmly up today. I will sell bull puts in Indices ETFs on hourly pull backs and sell bear calls to make strangles using 4 hr BB bands.

Grains made another try to pull up overnight. Let's see if we can close higher. My plan is the same as last week.

My execution:

ES/SPX never came back to close the gap. ES only touched o/n high then met with buyers. I sold some RUT bear calls as RUT moved more than SPX. Most of my credit spread are Iron condor now. Made one mistake again: forgot to put minus sign. sold a RUT credit spreads without at $0. It's my third time now. Need to get into a habit of double check my orders.

Grains had a surge today. Corn and wheat popped more than 4%. Soybean was up 30 points too on South America harvest delay news. I closed a sb bull put and added a wheat May 490 bull put for $1575. It looks like the seasonal is playing out. I will stick to my plan and check my contract deficits from last Fall.

Will Indices Keep Sliding? 2-2-15

My plan:

Indices held at a lower range of last Friday overnight. It looks like there are more room to the downside test. I have only $18K margin left in IB before open. I will have to close couple of positions to bring it up and not adding new trade in for now. I will trade Etrade and other accounts to sell ETFs.

Grains popped overnight but retesting lows after open. There may be another leg down or bottoming in process if seasonal trend is a reference. My plan is the same as it has been for last week.

My execution:

ES/SPX tested new low of 1973, a CLVN this morning and met with buyers. It reversed back to last Friday's high of 2017. If it close higher tomorrow then we will have a confirmed bottom. I set up several bull put in RUT this morning but no fill. I sold one set of SPY Feb 3 209 bear call on early pop. It got filled later afternoon which I forgot all about it. I will have to watch it closely since it got pushed through from 26-34. My available  margin is back to $30K thanks to QCOM's near 4.5% pop and a close of IWM bull put at 1c.

Grains staged a pop in early session. All three of them crossed last Friday's high but failed to hold any gains at the end. I closed 1 ZS bull put of 890 to release some margin. No other trades today.

Weekly Review 1-31-15

Volatility continued for the week in both indices and commodities. My expectation of resumed uptrend didn't play out even after ECB's new QE announcement. Bulls and bears fought a tug war for a week. It  looks like bears won by the end of the week for now. US indices closed at low of the week last Friday. My main hypotheses for next week is downward bias. There are some major Fib and R levels below for SPX and RUT. I will play further OTM levels for next week and sell bear calls on minor pops.

My intuition of some grains positions turned out to be real. When I rolled wheat to May and July bull puts I noted they were risky. I wanted to reverse them to bear calls but didn't. Noe they are underwater. My thinking process and pattern haven't changed since last summer in dealing with such moves. Got to plan ahead and stick to it. On the other hand my patience to stick to March bear calls in wheat and corn is paying off. Overcoming the fear of bounce lead to the right course of actions.

It was a b/o result for the week and month, a big progress to the prior two months. I will keep disciplined and be patient in order to move my equity curve back up.

Nest week, I will prepare to take stops of ES 1880 and 1850 then get in at lower entries. I will continue to follow my plan in grains with rules.