Monthly Report for Feb 2008 +4% / +$8,471

Its certainly been a busy month with good profitability in spite of a string of losing diagonal trades. With the market this crazy almost anything directional is tough not to get stopped out. I have a couple of smaller accounts for my kids Roth IRAs that are up more than +30% since the beginning of year!  Why aren’t my accounts up 30%?  Because the kids accounts were too small to participate in the diagonals that zapped me!

We are moving our monthly reporting to go expiration-to-expiration instead of per calendar month. Since we did one at the end of January this report really only covers Feb 1st to Feb 15th (expiration Friday). Also, we are going to report on our open positions as well as our closed positions to give us a more accurate picture of where we are month to month and to prevent us from hiding any losers or winners.

We have 27 positions opened or closed with 19 winning trades and 8 losing trades. Our win-to-loss ratio is 2-to-1. Our average winner returned +25% and our loser returned -28%. Our overall average per trade was a positive +10%.

Although our average was great we had too many losing trades that exceeded our sizing requirements and this brought our returns down to +4% for the two week period.

Closed Trades
DRYS Diag -38%
EEM IC +57%
F BRCS +33%
LFC BRCS +15%
MER BRCS +25%
NILE BRCS +18%
POT BLPS +116%
RIG BLPS -51%
RUT BWB +26%
TGT BRCS +14%

Open Trades
ACF Put Cal +7%
ACI Diag -40%
AFL Put Cal +19%
DIA Put Cal +9%
ERTS Diag -12%
FXI Put Cal +10%
GDX Calendar +19%
HOG Diag +16%
JPM Put Cal +17%
LOW Call Cal -73%
RUT BRCS +15%
UAUA BLPS +9%
UNP Diag 0%
WMT Calendar +37%
WYNN Diag -9%
YHOO Call Cal +21%
ZMH Diag -1%

Update on Goals for 2008
Lose 40 pounds - I’ve lost 15.8 pounds for the year and still doing well. I’m feeling better and sleeping better.
Drink a cup of water before every meal - Drinking about a gallon a day. The more I drink the thirstier I get but it does seem to reduce my hunger.
Take my vitamins everyday - Much better. Even if I don’t get to eat breakfast I pop the vitamins in my pocket and take them with lunch.
Work 150 times this year / 13 times a month - Fail. I haven’t even seen my house in the daylight much less a gym. Bad Mojo!
Give $25,000 to charity - We have given away $4,500 given so far this year.
Produce $250,000 in personal income (outside of my business and retirement) - Made my goals for February.
Pay off $125,000 of personal debt - No progress yet.
Study for and receive my Series 65 (Investment Advisor) license - Fail. I haven’t touched the material and I have a lot to do to get this complete before March.
New Design and Layout for Insanemoney.com - 90% done. We added a discussion forum (in beta), improved the performance, and kept the content up-to-date. Traffic is rising and we are attracting other serious and successful traders.
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.

Lessons learned:
1) My diagonals, which have been good money makers in the past, turned nasty. I’m putting together some additional rules around diagonals to not increase my debit, allow myself to get called out when successful, watch for delta inversion, increase my stop loss to 30%, and reduce my exposure to 1/2% per trade.

2) The calendars are rocking and making a killing. If you can get through one roll on a calendar then you are golden. Place my strike in the middle of the range and look for cross overs to roll.

3) I allowed two diagonal winners to become losers. Once I’m profitable I need to set my stop loss to prevent this from happening again. The market changed and my trading didn’t. Had I done this I could have almost doubled my returns this month.

4) Right now double diagonals and calendars seem to be the perfect trades to have. Be careful to not overexpose my portfolio and watch for the sudden change in the market direction.

5) I’m very pleased with the community of traders we are building. The ideas are rolling, accountability is high, and the money is flowing.

Plans for March
I’m going to focus on trading calendars and double diagonals. I will probably back off my trading a little and increase my trade accounting to view it on a macro level weekly basis. I made a costly sizing error on a diagonal that cut my profit in half. This new review process will catch this as well as indicate earlier when a strategy may be failing.

InsaneMoney.com is doing well and there is a ton to do. I will be spending a bunch of evenings and weekend working on perfecting the site and attracting additional members. I really want to work hard to create a fantastic trading team.

All the best,

Mojo

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