December
Open DateDate we would have opened this trade. | UnderlyingUnderlying security | Trade TypeTrading strategy | StrikesStrike prices | Option TypeCall or Put | ExpirationExpiration date | CreditAmount we would open trade. | DebitAmount we would close trade. | ResultPercentage this trade would have earned. | Trade NotesSpecial notes regarding this trade. |
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Dec 12 | RUT | Vertical | 1075/1080 | Put | Dec 20, 2013 | 0.90 | 0.00 | 21.95% | expired for profit |
The Federal Reserve finally acted on their many indications of a "taper" to their current bond buying program. They reduced the monthly purchases by $10 billion and many expected the markets to suffer a severe selloff because of it. Instead, Wall Street took the news on the chin and rallied strongly, adding nearly 300 points on the Dow and 30 points to the S&P 500 on that day. Going forward, future "tapers" will only reinforce the fact that the US economy is getting stronger.
November
Open DateDate we would have opened this trade. | UnderlyingUnderlying security | Trade TypeTrading strategy | StrikesStrike prices | Option TypeCall or Put | ExpirationExpiration date | CreditAmount we would open trade. | DebitAmount we would close trade. | ResultPercentage this trade would have earned. | Trade NotesSpecial notes regarding this trade. |
---|---|---|---|---|---|---|---|---|---|
Oct 10 | RUT | Vertical | 1000/1005 | Put | Nov 15, 2013 | 0.80 | 0.00 | 19.05% | expired for profit |
Record highs, record highs, record highs... That was the theme this cycle as both the Dow Industrials and the S&P 500 logged new record highs day after day. With the bullish sentiment continuing, we opted to go with the put spread once again for another successful trade.
October
Open DateDate we would have opened this trade. | UnderlyingUnderlying security | Trade TypeTrading strategy | StrikesStrike prices | Option TypeCall or Put | ExpirationExpiration date | CreditAmount we would open trade. | DebitAmount we would close trade. | ResultPercentage this trade would have earned. | Trade NotesSpecial notes regarding this trade. |
---|---|---|---|---|---|---|---|---|---|
Oct 9 | RUT | Vertical | 1010/1015 | Put | Oct 18, 2013 | 0.85 | 0.00 | 20.48% | expired for profit |
Trouble at home stole the spotlight this month as lawmakers squabbled over economic policy. Unfortunately, it was the government workers who had to suffer as lawmakers' inability to come to a deal forced the government to shut down. The shutdown lasted for 2 weeks but the selloff already did its damage. The Dow dropped nearly 500 points in the week following the shutdown but actually recovered all of those losses before the shutdown was officially over. All the shutdown did for us was give us a good trading opportunity, which our trades took advantage of.
September
Open DateDate we would have opened this trade. | UnderlyingUnderlying security | Trade TypeTrading strategy | StrikesStrike prices | Option TypeCall or Put | ExpirationExpiration date | CreditAmount we would open trade. | DebitAmount we would close trade. | ResultPercentage this trade would have earned. | Trade NotesSpecial notes regarding this trade. |
---|---|---|---|---|---|---|---|---|---|
Aug 28 | RUT | Vertical | 975/980 | Put | Sep 20, 2013 | 0.90 | 0.00 | 21.95% | expired for profit |
Problems in the Middle East surfaced again, this time as Syria’s allegedly used sarin gas on its citizens, which had the markets trembling. The struggle of the West to flex its muscle in forming a coalition for the use of force against Assad eventually gave way to peace talks brokered by Russia. As a result, a tentative deal was struck and calmed the markets down. The big news capping off this series was the winding down of the Fed’s QE initiative – or not. That the Fed opted, instead, to stay the course in buying up more debt to prop the economy, had economists and traders criticizing the FOMC for misleading the public.
August
Open DateDate we would have opened this trade. | UnderlyingUnderlying security | Trade TypeTrading strategy | StrikesStrike prices | Option TypeCall or Put | ExpirationExpiration date | CreditAmount we would open trade. | DebitAmount we would close trade. | ResultPercentage this trade would have earned. | Trade NotesSpecial notes regarding this trade. |
---|---|---|---|---|---|---|---|---|---|
Jul 17 | RUT | Vertical | 1005/1010 | Put | Aug 16, 2013 | 0.95 | 0.00 | 23.46% | expired for profit |
The markets were relatively flat this cycle as traders contemplate on what the Fed will actually do with their bond buying program and interest rates. Some analysts believe that the Fed will taper their easing program and purchase less in bonds while others do not believe the US economy to be strong enough to handle that. Interest rates probably won't be touched until next year but the markets try to trade 6 to 9 months ahead of time. This means that they will move stock prices to what they believe they should be in that time.
July
Open DateDate we would have opened this trade. | UnderlyingUnderlying security | Trade TypeTrading strategy | StrikesStrike prices | Option TypeCall or Put | ExpirationExpiration date | CreditAmount we would open trade. | DebitAmount we would close trade. | ResultPercentage this trade would have earned. | Trade NotesSpecial notes regarding this trade. |
---|---|---|---|---|---|---|---|---|---|
Jun 19 | RUT | IronCondor | 850/855/1035/1040 | Both | Jul 19, 2013 | 8.72 | 9.20 | -11.42% | Sold 1035/1040 for 0.80, then 850/855 for 0.25. Bought short call strike, 1035, for 9.20 and let long call strike, 1040, expire ITM for 7.67 credit. |
The markets finally came down this monthly cycle but they did not stay down for long. Traders were spooked by the Fed when chairman Ben Bernanke hinted on cutting back with the bond buying program and possibly raising rates soon. The Fed has been singing this tune for months and there was no real reason for the selloff this cycle, other than profit taking. Now that profits were locked in, traders resumed in pushing the markets to record levels.
June
Open DateDate we would have opened this trade. | UnderlyingUnderlying security | Trade TypeTrading strategy | StrikesStrike prices | Option TypeCall or Put | ExpirationExpiration date | CreditAmount we would open trade. | DebitAmount we would close trade. | ResultPercentage this trade would have earned. | Trade NotesSpecial notes regarding this trade. |
---|---|---|---|---|---|---|---|---|---|
May 6 | RUT | Vertical | 1000/1005 | Call | Jun 21, 2013 | 0.95 | 0.00 | 23.46% | expired for profit |
The markets continued the climb higher for this series, but investors reacted negatively to Ben Bernanke dropping hints of tapering the Federal Reserve's purchasing program within the next few months. The markets dropped and our position expired worthless for a nice gain.
May
Open DateDate we would have opened this trade. | UnderlyingUnderlying security | Trade TypeTrading strategy | StrikesStrike prices | Option TypeCall or Put | ExpirationExpiration date | CreditAmount we would open trade. | DebitAmount we would close trade. | ResultPercentage this trade would have earned. | Trade NotesSpecial notes regarding this trade. |
---|---|---|---|---|---|---|---|---|---|
Apr 8 | RUT | Vertical | 885/890 | Put | May 17, 2013 | 0.95 | 0.00 | 23.46% | expired for profit |
Apr 17 | RUT | Vertical | 855/860 | Put | May 17, 2013 | 0.90 | 0.00 | 21.95% | expired for profit |
Economic data lent confidence to already overly-exuberant investors and pushed the major benchmarks into record territory. As a result, we were able to ride both of our Call positions all the way to expiration without any worries. We could have bought them back earlier in the series in order to take risk off the table, but we had a huge buffer and saw no need to incur more fees to execute the close.
April
Open DateDate we would have opened this trade. | UnderlyingUnderlying security | Trade TypeTrading strategy | StrikesStrike prices | Option TypeCall or Put | ExpirationExpiration date | CreditAmount we would open trade. | DebitAmount we would close trade. | ResultPercentage this trade would have earned. | Trade NotesSpecial notes regarding this trade. |
---|---|---|---|---|---|---|---|---|---|
Mar 6 | RUT | Vertical | 965/970 | Call | Apr 19, 2013 | 0.95 | 0.00 | 23.46% | expired for profit |
Looking at the 30-day chart showed the RUT trading more days below the averages than above. This trend worked out perfectly for our Call spread and we were never threatened. Instead of adding even more risk by forming our typical condor, we simply let the Call spread expire worthless for a nice return.
March
Open DateDate we would have opened this trade. | UnderlyingUnderlying security | Trade TypeTrading strategy | StrikesStrike prices | Option TypeCall or Put | ExpirationExpiration date | CreditAmount we would open trade. | DebitAmount we would close trade. | ResultPercentage this trade would have earned. | Trade NotesSpecial notes regarding this trade. |
---|---|---|---|---|---|---|---|---|---|
Feb 1 | RUT | IronCondor | 855/865/940/950 | Both | Mar 15, 2013 | 3.70 | 1.70 | 31.74% | closed for 2.00 net credit. |
Positive sentiment we saw in January did not carry over to February and the Bulls were kept in check to see the markets trade relatively flat for the month. We were able to close down our position for another nice return
February
Open DateDate we would have opened this trade. | UnderlyingUnderlying security | Trade TypeTrading strategy | StrikesStrike prices | Option TypeCall or Put | ExpirationExpiration date | CreditAmount we would open trade. | DebitAmount we would close trade. | ResultPercentage this trade would have earned. | Trade NotesSpecial notes regarding this trade. |
---|---|---|---|---|---|---|---|---|---|
Jan 7 | RUT | IronCondor | 830/840/910/920 | Both | Feb 15, 2013 | 3.60 | 8.30 | -50.00% | closed for 4.70 net debit. |
Corporate-earnings season was met with much enthusiasm as positive sentiment on Wall Street served to move the markets higher towards record levels. Broad gains saw a spike of about 2% in one session to add insult to injury this month. The lack of concern over having been in oversold territory for weeks and the looming fiscal-policy debates in Washington did nothing to help our cause. Our positions finished in the money with the results posted above.
January
Open DateDate we would have opened this trade. | UnderlyingUnderlying security | Trade TypeTrading strategy | StrikesStrike prices | Option TypeCall or Put | ExpirationExpiration date | CreditAmount we would open trade. | DebitAmount we would close trade. | ResultPercentage this trade would have earned. | Trade NotesSpecial notes regarding this trade. |
---|---|---|---|---|---|---|---|---|---|
Dec 6 | RUT | IronCondor | 780/790/865/875 | Both | Jan 18, 2013 | 3.70 | 6.15 | -13.26% | closed for 2.45 net debit. |
The fiscal cliff talks took control of the markets contributing to some choppy sessions, but at the end of the day the bulls had run the bears over pushing the major indices into even higher territory. We had to close down our first Jan13 Iron Condor position after a very healthy gap upward blowing past our exit trigger. We took the opportunity to open another position with the same Jan13 expiry which expired worthless and helped recover some of the losses from our first trade.