In my past few weeks here at iBC, I’ve had a decent run. However, it might be fair to say that the volume of ideas and trades I’ve pushed might be more than many can handle. Not that my trading cares about your attention span, but I felt the need to give the right impressions around here as I make myself more comfortable.
In the last 5-6 weeks, I’ve been racking up double digit portfolio returns each week, and last week I was hitting them on a daily basis. I recognized market conditions being very conducive to my trading style. I took trades. A lot of them.
I normally carry 10-12 option trades at a time and about as many stock positions as well. However, in the last month, I’ve been doing nearly twice that amount, taking advantage of the market opportunity, and taking on a lot more risk.
Early on in the week, I thought it made sense to start selling more than I was buying. I’ve been reducing overall portfolio risk in order to have dry powder, and avoid taking a drawdown with the amount of leverage I was running. Those days hurt and you need to be proactive at avoiding them when you can smell adversity coming.
As I stand now, I have multiple trades on with June expiration dates. I know many of you might be following any of these positions. As I look across my book, I am content with structure, my trade plans, and risk…in case you were wondering.
I expect very little, if anything, out of the market tomorrow. After the last two sessions, I doubt you’ll see traders all too thrilled at the idea of loading or unloading stock into a three day weekend. I am not looking to add any more leverage tomorrow. DECK might persuade me otherwise, but aside from that, my main goal will be buying up shares of cheap stocks. When I lose interest in leverage, throw me a list of cheap stocks with ugly fundamentals, and I will wow you.
Tomorrow, I am watching: ECTY, RVLT, SCON, TC, COOL
China stocks I’ve set alerts/buy-stops on: NCTY, SPU, CALI, CCCL, CHOP, XIN
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Its not about attention span, its about seeing how all these trades fit into the bigger picture of portfolio management. You are quoting total portfolio returns, but thats what we don’t see as there’s no objective way to measure how your strategy works over many many trades. A person can’t just take a few of these trades, they need to have an overlying strategy where they’re doing lots, to reduce the noise and capture an edge, if there is any. Otherwise, just taking a few random hail Mary weekly option trades is pretty much going to appeal to teenagers with a genetic predispostion to gamble.
“A person can’t just take a few of these trades, they need to have an overlying strategy where they’re doing lots, to reduce the noise and capture an edge, if there is any.”
The edge is in stock selection and timing. Not in the option.
Why can’t a person take a few of these trades and sprinkle them in their own strategy? Just put up 1% or 2% per option trade that you do run… I don’t see the problem… It’s about setups and alpha and keeping costs low enough to manage volatility,, not “diversification” and “multiple asset classes”. And if you can’t handle the volatility the timing is still great so trade ITM stocks with plenty of time value to be a high percentage system while minimizing downside, or even trade the underlying stocks.
He picks high probability setups and trades aggressive “low probability” options with them for big upside potential but a lower win rate.