We’ve been sitting on our hands since closing our May position last Wednesday, as implied volatility remains above the level where we’re willing to enter new positions. I’ll have more to say about possibilities for June trades after reviewing the May performance numbers… Our return on total capital risked in May was 17.43%, which translated to a Model Portfolio return of 5.79%. Comparing that to the last cycle in which we were faced with a major sell-off—i.e., February,…
Tuesday, March 23, 2010
After closing our March trades last week for another net loss (–3.47% Model Portfolio return), I had planned to begin this week’s Update by reminding members, once again, why it’s important to apply any proven strategy consistently, trade after trade and month after month. But rather than bore you all by repeating myself at length, I’ll pass along some comments from two other savvy traders. Calendar Options member Bryan D. wrote the following in an e-mail last week, and I…
Thursday, October 29, 2009
Earlier this month, we announced a change in how we're going to publicize the performance of our strategies. Much as a company's performance and the price of its stock can suffer in the long-run as a result of too much focus on short-term performance, we believe that investors do best when they take a long-term perspective...
Tuesday, September 8, 2009
The unrelenting August rally put some pressure on the call side of our iron condor positions. However, we were able to close out the month with flat-to-positive performance for the newsletter trades due in part to our ability to stagger trade entries based on volatility and delta exposure and to size positions on a risk-adjusted basis – both techniques that we teach on the members area of the site. We are nearing the end of the September expiration cycle and…
Thursday, February 5, 2009
A steady decline in implied volatility through the first week of the new year weighed on our positive-vega calendar positions, narrowing their profitability ranges and pushing down their unrealized gain/loss. Although the January cycle saw a drop in intermediate-term price volatility, the period was dotted with short-term whipsaws, which our vega losses made more difficult to tolerate without adjusting. With the combination of dwindling IV and fits of short-term volatility working against us, the average loss for our two trades…
Sunday, September 21, 2008
In our August monthly review, we expected that “the next phase of this bear market will likely be driven not by U.S. financial companies or by energy prices per se, but rather by the effects of the American slowdown being felt by the rest of the world.” See, that’s why we’re traders and not economists. Although in our defense, the reason AIG was nationalized was partly because of the effect its failure would have had on European and other counterparties. …
Saturday, June 21, 2008
We feel like we’re saying this every month, but it sure feels nice not to have any skin in the game come expiration day. Options expiration surely had something to do with the intensity of today’s selloff, and this was a textbook case of why we never hold positions into expiration. The fancy-pants phrase for the influence options expiration had today is “negative gamma.” The practical significance of that phrase is that when we gapped down at the open, lots…
Jared Woodard is a registered commodity trading advisor who specializes in trading volatility as an asset class. With over a decade of experience trading options, futures ... Read More
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Tuesday, May 18, 2010
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