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Posted by Brandt Hackney

Publisher of & member site Wolf on Wall Street, equities/options trader 13 yrs., 4 yrs teaching, won multiple awards for trading & indicators.

Our Option Trades Since Feb 20th

by Brandt Hackney on March 1, 2013

in Stocks, Technical Analysis

Two posts down is how we have fared this month at our member’s site,

Since February 20th when the post was published, lets see what else we’ve been able to do with this market and let me show you what I mean by “This market”.

To see our percentage performance, just scroll down a little…

Above is the daily S&P-500 chart for 2013. The light blue channel is my own indicator called, “The Trend Channel”, I use this indicator to identify stops so I can hold on during a trend and base my exit on real changes that suggest the trend is changing, there’s no guessing, the channel adjusts to each stock’s own personality and when the stock starts acting very different, price closes below the channel and it’s a stop out.
I have found over the years that the channel will keep you in for 80% of the trade, but the most volatile 20%, 10% at the bottom and 10% at the top if you time it perfectly, is not worth chasing. Chasing this extra 20% typically sees you sitting in a stock that is going sideways and with massive volatility, it’s much easier to take the 80% of “Easy Money” and move on.
In red is where the Channel would have stopped you out on the close, since then you would have nothing but headaches.
Here’s the trend for 2013, it’s a +4.69% return. The area in the yellow box is where volatility picks up and the SPX churns and burn traders, the gain in that box right up to today’s close? -0.10% , that’s right, not only virtually nothing, but a loss! However, it’s not because the market didn’t move, I count nearly 175 S&P points in that yellow box, if only half of them went toward a trend, you’d have a +6% gain, more than the rest of the year and in just 2 trading weeks.

We figured out that this was coming and adjusted early for it, we call it two things:
1)Take What the Market Will Give”
2) “Use the Right Tool For the Job”

We found for the most part that trading weekly options on a very short duration of about a day to two days worked the best for us, but it wouldn’t have been possible if our other custom indicator, 3C didn’t tell us when to buy Calls or Puts and when to sell them.

 This 5 min chart of the S&P futures shows us a strong negative divergence/signal to go short the market with puts on Thursday, we typically sell the next day.

 This would be the trade via puts.

After hours Thursday the 1 min 3C chart started showing accumulation, we figured it was for an options expiration pin, but whatever it was, it would move the market higher so we wanted to close this trade as soon as possible and did so at a profit today.

Lets see what has happened since the last post…

February 21st : We opened Calls in the QQQ and IWM, later that same day we added to both positions. We also added to some Gold/GLD $150 calls 

February 22nd: 
At 1 pm we took 1/3 of the position in the IWM/QQQ Calls off for a 31% gain in the IWM and 29% in the QQQ, and this in less than a day. Later in the day we added to our GLD position with 4/19 $150 calls.

After the weekend…
February 25: 
At 10 a.m. we closed all the QQQ and IWM Calls opened Thursday the 21st, the gain was nearly +44% for the Q’s and nearly +40% for the IWM calls. Later in the day we took some off the table in our March GLD 150 calls.
These were filled for a +22.7 gain.

February 26: 
Around 11:40 we took some of our April GLD Calls off the table for a +67% Gain

Around 2 pm we closed out the rest of the April GLD 150 calls for a +62% gain
Then we entered long positions in the 3X leveraged longs, URTY and TQQQ. I decided to use less leverage as the signal wasn’t as clean and the market was more volatile.

February 27:
The next day around 11:45 URTY and TQQQ were sold at somewhere near a +4% gain in each as URTY filled at $87.94.

As a separate trade, we closed a long position in ZNGA for a +53% gain.

Later that day we opened some April 20th QQQ 68 puts and a new April $150 GLD Call position. UVXY was also taken on near the end of the day as a short term trading position.

February 28:
We added to the April GLD $150 call as well as some longer term strategic short positions. We also opened a SPY March 8th Put, the rest of the day was spent adding, starting or filling out strategic positions.

March 1:
Today was fairly quiet,  right at the market open we took half of the March SPY Puts off the table…
Theses closed for about a +32% gain. 

Our Weekly performance came in like this…
That’s a +13.55% return on the entire portfolio, ranking #18 out of 983 competing portfolios.

Have a great weekend

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