Trade Log

1/25/2019

Another day in the life of a premium seller. I sold a strangle in XLI, with an IVR of 53.

I also defended my XME strangle by rolling up the puts.

1/24/2019

First off, I sold an XLE strangle; the IVR had spiked up to 42, which isn’t bad considering the current market.

I also defended my SMH position by rolling up the put and taking in a whopping $96.

I sold a QQQ strangle, just to lay out more premium.

And finally, I defended my XLK position by rolling up the put. This position has been defended twice and has reached 50 days till expiration–both of which are triggers that indicate the trade will be closed as soon as it is a scratch or better. It is currently sitting at $-18.

1/23/2019

Who says trading 150 DTE strangles means you don’t get to trade very often?

Again, the goal is to follow the trading plan and still create a lot of trade turnover. I closed my QQQ and XLE strangles for around 45% profit. I didn’t wait for a few more dollars to hit 50% since I want to keep some cash free for trading in case we get a volatility spike.

I closed XLI for about 20% profit because the position has been defended once. My guideline is 25% profit if a trade has been defended once (if it has been defended more than once, I go for scratch). Again, I’m a little loose if I’m trying to keep cash free and maintain trade turnover.

I also opened strangles in GLD, XRT, XHB, and OIH.

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28 comments on “Trade Log

  1. Arthur,

    You always take the $150 as your primary measure of risk.
    IYR gives you only a credit of $0.66/strangle.

    So now you sold two contracts to get a credit of as close to $150 as possible, right?
    This means, that the $150 relates to ALL strangles (the whole position) you put on in one shot, not $150 for ONE strangle then.

    If so, I obviously misunderstood this part 🙂

    Thanks for a quick feedback.

    Like

    • Yes, $150 for the whole position I put on (can be 1, 2, 3, etc contracts, depending). That keeps my profit expectation and max loss expectation the same for each position. So the. I can then expect probabilities to play out.

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      • Perfect clear now, thank you Arthur.

        Liked by 1 person

      • Arthur – first off I’d like to thank you for sharing your strategy and trades. I have been trading for over 20 years and primarliy options for the last 10. I have always been more of premium seller but have deployed many strategies. I really like the thought process behind the tastytrade mechanics but happen to like the way you have laid out your strategy.

        A couple of questions as I look to deploy this strategy for my own account:

        1. Since you are targeting $150 credit per trade with 10 delta strangles, how do you think about this relative to ETFs with varying stock prices since it seems as though you are staying between 1 to 3 contracts per side? In other words if you were to trade futures or an ETF that had a $20 price vs. $200 price it would seem that you can’t really keep to the $150 target and it obviously will impact your buying power/notional amount diffrently.

        2. Do you scale into trades or do you put on the full amount of a position if it meets your trade requirements? Said another way, if you were going to allocate a portion of your portfolio to a SPY position that consisted of 10 contract (20 total) strangles, would you put on some % of the position then wait to add to it thereby also diversifying the DTE and possibly the strikes as the stock would presumably move one way or another?

        I trade a fairly large account and have been struggling with staying consistent. I typically have multiple positions in 30 underlyings on at any time and I find myself over complicating things. I try to stay fairly delta neutral. Several years ago I used focus my options trades on 90-180 day timframes (selling premium) but found myself moving more into the 45-60 day expirations after watching tastytrade. Your explanation of why you use 150 days as your target really made me think about my style and what had previously worked. I like having the the wider deltas and having a bit more cushion. I do a lot of charting and look at key trends/support & resistance lines. Obviously the key with anything is having a plan and remaining disciplined.

        Thanks again for sharing and I look forward to tracking your journey and sharing trades.

        Russ

        Like

      • Russ,

        1. For futures, I would move down in delta until I could achieve the $150 target (way away from the money). Even though there is a lot I love about futures, I have stopped trading them for now because I found that the higher commissions, higher slippage in bid/ask, and concern of overnight jumps was not offset by the advantages for me. I am currently sticking with ETFs and the slope of profitability is more smooth.

        2. No, I never scale into a position. I like to keep it simple when I can, and there are plenty of underlyings to allow me to trade small, trade often (even with 150 DTE).

        I can’t see myself ever going away from 150 DTE as it has been a great system for me. I really don’t want to try to convince others that it is the best way for them to do it–I just have to be honest about what has been great for me.

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  2. Thanks Arthur!

    Like

  3. So what is your though on doing this in an IRA? What is the effectiveness of using iron condors to accomplish the same in an IRA? Width and defined risk can limit the effectiveness, or force an increase in size.

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  4. Ok. Last question on your CSPs: DO you roll out 150 days again or 30 days?

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  5. Arthur – any thoughts or rules you go by if you get a quick profit? I have had a couple of trades with an an initial 100+ DTE where I hit 20-25% profit inside of two weeks. Thinking it makes sense to pull them down.
    Thanks,
    Russ

    Like

    • That is one area where I leave it up to trader intuition. I tend to take profits off if I get a big jump in daily profit—but I usually like to at least make $50 on the trade. Sometimes I really want to lay out more trades (in high IV environment) but I need to free up capital to stay within my rules, so I’ll pull off profitable trades then as well.

      Like

  6. Arthur, I’ll add my thanks for sharing your trading strategy in such an open manner. When you adjust, do you wait to assess your positions’ deltas until after the day’s close and then make the actual adjustments the following day, or do you adjust intra-day?
    Rgds, Chris

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  7. When you have a position that you have to adjust per your rules….. (say you sold both sides @ 10 Delta). The call goes to 20 Delta, so you move the put to 15 Delta. At which time, your next adjustment point on the Call would be at 40 Delta, but what about the Put sitting at 15 Delta? Do you now adjust it if hits 30 Delta (2 x 15), or do you look to adjust it a 2X of the original delta…which would be 20 Delta?

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    • At that point I would only defend if the Put hit 40 delta. Once a 20 delta has triggered an adjustment, there has to be a 40 delta reached (on either side) before I adjust again.

      Otherwise, there is just too much adjusting; having moved the put in to 15 delta . . . . makes it pretty likely that it will reach 20 delta at some point.

      Like

      • First,thanks for sharing your trading plan.My questions is about when you defend the attacked side: I understood you defend at 20,40,50,60 deltas….30 deltas is not important?
        My second question is close to Tyson question…if the markets turns in the opposite direction after you defend one side…can you make some examples how you would do it?
        Thanks a lot

        Like

      • I’ve found that another defense right away at 30 delta is too aggressive, too soon. If the market turns the other way, I will defend by rolling the side the market is not currently attacking. However, if I’ve already defended at a 20 delta trigger on the one side, I will wait for a 40 delta on the other side, etc. So each defense trigger point (20, 40, 50) can only happen once on the position.

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  8. Ok, Thanks a lot

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  9. Hi again:to make it clear let´s imagine the price attacks call side and it gets 20 deltas in call side.Then we roll put side to 15.The price continues in uptrend and now we have 40 deltas in call side…then we roll put side to 30.Now the price turns in the opposite direction and we will adjust when we reach 40 deltas in the put side and we will roll call side to 30…? My question is that we already reach 40 deltas in the call side previously….I´m missing something here…some help? Thx

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  10. You would not adjust the put side when it hits 40—you would wait until 50 (since the 40 adjustment was already triggered on the other side). This prevents too many adjustments.

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  11. Shay Hazan

    Hi,
    Thanks for sharing your trades !
    I have two questions:
    1. I see in some of the positions you opened, the total credit is 66 (e.g. gld), so it less than the minimum 100 credit of your rules.
    2. The expected ROI (for 100% profit) is 5% for 5 months – is it good enough for you ?
    I understand that you put this trade mainly for diversification, but…

    Like

    • 1. I sell 2 lots if it’s 66–so I’m taking in $132 for the trade.
      2. I average about 30-40 days in these trades, even though they are 150 DTE. I don’t look at ROI for a position—I look at how the overall portfolio has performed.

      Like

  12. I occasionally check your trade log and notice that it has been dormant since 1/25. Are you not putting on any new trades due to low IV or just too busy with other projects to keep it up-to-date?

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