Monthly Report for January 2008 +3% / +$7,812
Boy, January was an unbelievable month. Difficult, fast, irrational and completely emotional. I felt like I was dating a ditzy supermodel! 
In my December monthly report I talked about how based on my probabilities I was having too many winners and that my trading would likely “regress to mean”. Fancy words for “I’m going to have more losers than winners”. I reduced my risk per trade and was glad I did. I’m really pleased to say that I got out of January up 3% and I’m excited about it.
My average return per trade was +13% but my cash requirements on each trade weren’t consistent so I ended up with a return of a little more than +3%.
Trades:
AAPL -21%
AAPL -12%
AMZN -32%
FXI +73%
GOOG -29%
JOYG -30%
MA +29%
MO +32%
SPWR +31%
SPY 144 -3%
SPY 145 -35%
UAUA +148%
Avg per trade: +13%
Looking at my January trades its clear to see that I should avoid all stocks that begin with the letter ‘A’. Had I done that my month would have been awesome. I’ll be sure to add this to my trading rules in the future! <j/k>
Below are my open positions at the time of closing on January 31st. I’m doing this to increase the price accuracy of my rolls and adjustments on a month-to-month basis. The profit calculations from January above are only counting closed trades so its probably lower than it would be if I included some of these verticals I sold that are now way out of the money but not closed. The information on the open positions will become more valuable once we close February.
Open Positions: (symbol, followed by value of position)
DRYS 27.80
EEM 1.70
F .20
GDX 3.30
HOG 4.70
LFC .05
MER 1.35
NILE .25
POT .45
RIG 3.40
RUT -6.60
TGT 1.80
UAUA 1.00
UNP 19.45
WMT 1.75
WYNN 16.25
ZMH 12.70
Lessons learned:
1) When I went to adjust my calendars on SPY that went against me I didn’t have sufficient capital to cover the margin requirements needed to convert those into diagonals. I need to reduce my number of contracts, increase my capital, close those positions or convert those positions into verticals for adjustments.
2) Don’t purchase calendars more than 4 months out. You are trying to pick a period of quiet (like after earnings) with little movement. The further out you go in months the harder it is to do this. Also, if you limit yourself to 3 months then you are likely to be in the vega cycle for earnings.
3) Once you have a profitable calendar place a stop loss on it to preserve at least some of the profit. I HATE it when a winning trades becomes a losing trade.
4) Make sure your stop losses are all GTCs and that you have extra margin available.
5) Mentally its very tough for me to handle large percentage losses that you find on verticals and iron condors. Do I really want to trade them?
6) Several of my adjustments didn’t get filled because I was trying to get the mid price during heavy volumes of trading. Don’t do that. Get adjusted and get out.
7) I need to readjust how much capital I’m using per account. Twice in this month I had instances where I wasn’t able to complete an adjustment on smaller accounts because I had over committed my capital. I will further consolidate my accounts and likely have to pass on trades in smaller accounts where the potential capital needs for adjustments are too high (like IRA accounts).
8) I’m going to return to more simple methods of putting on diagonals by not going long so many months out and by not adjusting if the trade goes strongly in my favor. Instead I will close out the trade and then evaluate if I should re-enter the trade at some point in the future.
Update on Goals for 2008
Lose 40 pounds - I’ve lost 13.8 pounds in January.
Be at my computer by 6am - I’ve already stopped doing that since I’m no longer trading futures pre-market.
Drink a cup of water before every meal - Will improve on this. There are many days I get dehydrated when I’m working and not drinking enough water.
Take my vitamins everyday - Will improve on this. If I start working before I eat breakfast I usually don’t get to breakfast that day and miss my vitamins.
Work 150 times this year / 13 times a month - Will improve on this. I’ve only worked out 6 times in January. Need to set appointments and keep them.
Give $25,000 to charity - We have $4,000 to charity this month.
Produce $250,000 in personal income - Made my goals for January.
Pay off $125,000 of personal debt - No progress yet.
Study for and receive my Series 65 (Investment Advisor) license - I’ve got the materials and I’m 20% through them. I will complete the materials in February and prepare for my exam.
New Design and Layout for Insanemoney.com - 80% done. Will add discussion forum, online store, etc.
Raise $1,000,000 of investor funds - Haven’t started yet. I need to complete my license first.
Make 3% a month in options - Check. Did that.
Plans for February
I think I’m going to focus on bearish diagonals and calendars (maybe even <gasp> call calendars!!). I’m going to continue to network and help bring along some newer traders. Building a super trading group is paying off well and I’m really enjoying it.
All the best,
Mojo
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