Monthly Report for Apr 2008 +2.9% / +$6,390
I’m pretty disappointed in April. Not because of the market. But because I broke two trading rules. I was having a great month and up 6.7% on expiration Thursday. I broke my first trading rule by getting into a short out-of-the-money strangle on GOOG with 80 points of safety (I’m not allowed to trade GOOG over earnings).
On Friday, GOOG gapped up and I took the max loss of 2% of my portfolio. To top that off I was holding short calls on USO and looking very profitable on the morning of expiration Friday. I could closed those out for +.20 but thought “Ah, just let them expire…” and went off to battle GOOG (breaking my second rule to close out specs trades once 80% profitable). Within two hours, a group of Nigerian rebels blew up a pipeline and OIL and USO went to the moon. Another max loss of 1%.
Don’t get me wrong, 2.9% is still good but not as good as it could have been had I stuck to my rules. Rules are developed for a reason and the market is hard enough to trade against without taking money out of my own pocket! DOH!
Trade Record
37 trades, 28 wins, 9 losses = 3-to-1 win / loss ratio
avg $ per win: +858 avg $ per loss: -1,496
avg % per win: +12.3% avg % per loss: -3.7%
I’ve usually done a good job of maintaining a good win / loss ratio and a good win % to loss %. I still felt like my results were lagging those metrics. So I added the avg $ per win and avg $ per loss and uncovered a problem. Even though the other two metrics were fine, I was losing a lot more money per trade than winning. A HAH!
Update on Goals for 2008
Health - I’m down 16 pounds and in the zone to lose more. Vitamins, water in take, doctor visits, etc are doing well. I’ve been running a bit with a my daughter and really enjoying that. When I come home in the evenings I set to either doing yard work, a couple of errands, or reading to occupy myself before dinner. I should probably join my buddy in the gym a few times a week as well.
Give $25,000 to charity - We have given away $7,000 given so far this year.
Produce $250,000 in personal income (outside of my business and retirement) - We are ahead of schedule here and building up some cash reserves.
Pay off $125,000 of personal debt - So far we have paid down $41,000 in personal debt.
Study for and receive my Series 65 (Investment Advisor) license - Fail. I haven’t touched the material and now I’ve probably forgotten most of what I’ve already learned.
Insanemoney.com - I’m still a bit behind in emails and post and working to catch up. The forums section ( http://www.insanemoney.com/forums/ ) is alive and kicking with over 160 members and lots of great traders. We managed to move servers again and our traffic is growing quickly. We added a few new members to our trading team and we are really enjoying their enthusiasm and input.
Raise $1,000,000 of investor funds - Haven’t started yet. I need to complete my license first.
Make 3% a month in options - I didn’t quite make it this month.
Lessons learned:
1) I’m slowly putting iron condors on the RUT back into my portfolio. I need to better construct my rules and chat with other ICs traders.
2) Calendars did OK but our volatility crush plays did great (even including the GOOG mess).
3) I’m starting to use butterflies for vol crush but I’m still not clear how to manage them.
4) I did well managing my deltas on adverse moves. I need to be quicker to take those trades off once the price is moving back in my direction.
5) When I’m putting additional capital into the my portfolio I need to make sure that I’m still sizing for the previous portfolio until I’ve been through an expiration. Otherwise its too easy for a new (larger) trade to wipe several gains from smaller trades.
Plans for May
I’m planning on doubling my capital and using iron condors to produce a little more returns and consistency to my monthly results. I’m also using some futures to hedge and will likely work to improve that system to produce a small cash flow each week. I need to stay focused on good setup, good management and lots of accountability.
All the best,
Mojo
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