10/21/2020 Sold 5 cash secured puts on DKNG. Strike $45, sold for $4.5 premium, expiration Oct. 30th.

Hi everyone. I am going to attempt my first “wheel strategy” on DKNG. I sold the 45 strike put expiring next Friday for $4.5. I sold 5 contracts because I want to own 500 shares if/when I’m assigned. I sold the puts when DKNG was trading at $42 today.

I think the current pullback is going to end soon (~1-2 weeks) so I’d like to take advantage of the high option premium by selling puts and calls. I want to get assigned so I sold in the money puts. Once I get assigned, I plan to sell calls roughly 1-2 weeks out at 10% above the trading price (making my position a covered call). Since earnings are in about 3 weeks, I plan to stop the strategy before then.

Daily chart of DKNG below:

Have a nice rest of your week!

10/19/2020 Stock indexes flat this week, and I went long on AMGN. Still bullish very near term and bearish medium/long term.

Hi everyone. I added a short term swing trade (long) on AMGN this week at 235. I will sell before earnings in about a week and a half. My overall outlook on the market remains the same: bullish very near term (1-2 weeks) and bearish on all time frames after that. I think valuations are still too stretched in the FANG stocks.

SPY weekly chart below:

Since I’m bullish in the near term, I went long on AMGN this week at 235. Chart below (SL 225, Profit exit: 255 OR before earnings)

I hope you have a great week!

Covered short on BABA for a .4% loss on account at market close.

Quick update: I covered my BABA short at market close today for a .4% loss on my account. I shorted at 300 near the previous high expecting a sell-off down to the 270 zone, but it doesn’t look like that’s going to happen.

I think the price action is a bit too strong given the overall market action today. On another note, it looks like Apple wants to drag down the technology sector / QQQ, but we will have to see if there’s follow through selling tomorrow. Have a great rest of your day!

10/11/2020 Markets up quite a bit this week. Looking like more upside in the near term, but I’m still bearish. Shorted BABA on Friday.

Hi everyone, welcome back. The markets look like they want to move quite a bit higher in the next one to two weeks, but I’m still cautiously bearish on all other time frames.

I started a half sized short position on BABA on market close Friday at 300. My stop loss is at 315 and my target profit is at 270. I don’t want to be net short on my short term trades since the market momentum is still up, so I plan to buy some AMGN for a quick swing trade (and maybe some DPZ).

Weekly chart of SPY below. Perhaps we retest the low to mid 350s this week before pulling back. Maybe we just continue to shoot upwards, I don’t know. I still favor and prefer a move down so I can add longs.

Daily chart of BABA below. Entry: 300, Stop loss: 315, Profit Exit: 270.

After examining my trading history, it looks like my success rate on shorts in an uptrend is about 35%, and the average gain is half the size of when I go long with the uptrend. Either way, I’m currently risking .5% of my account on this trade, and will only add more if it goes in my favor (moves down).

I’ll keep you all updated if I decide to take any additional trades this week. Have a nice rest of your day!

10/3/2020 Markets up a bit this week. Added a little more to MRO and bought some ODT. Bearish on markets for all time frames except the very near term (1-2 weeks)

Hi everyone, welcome back!

Although I’m neutral/slightly bullish in the near term, I’m bearish in the 1-6 month time frame. Most sectors haven’t fully recovered and the recovery is lead primarily by the five largest companies.

The financial and energy sector underperformance is drastic, although we did get some sector rotation on Friday.

SPY daily chart below:

I added about 30% more to my MRO position at $4.07 this week. I also started a small position in OBT at $14 (a pharmaceutical company). I don’t have a hard stop loss so I’m using a much smaller position size. I plan to add more and complete my full position if we retest $12.

I bought more MRO because they reinstated the dividend – this to me signals MRO’s confidence in their future cash flows. I still plan to sell in the 11-12 range, which is what I think MRO is worth currently.

I bought ODT because the CEO and Boxer Capital LLC increased their stakes significantly. I did some research on Boxer Capital LLC and they have a very good track record, and ODT is now one of their largest positions. I also spent about an hour looking at their 10k annual report, but it looks very bad from a cash flow perspective due to its high burn rate from R&D costs. Either way, the CEO and Boxer Capital LLC have more information than me, so I will just follow their lead.

Insider transactions for the last 2 years below. Notice the heavy buying in the $13-$15 range in September.

I don’t usually do these long term holds (last one I did was on Boeing), but for these trades, I don’t have a hard stop loss, although I do have a mental stop loss. The way I manage risk on these trades is by using much smaller position sizes. The sizes are small enough that even if the company went bankrupt, it wouldn’t be a huge hit to my portfolio.

MRO Daily chart below:

ODT daily chart below:

I’m looking forward to next week’s stock market developments! Enjoy your Sunday 🙂

9/26/2020 Detailed analysis of my entire swing trading history. Only position I have left is MRO – I’m out of all other short-term positions (AAPL, XLF/SPY, FANG).

Hi everyone, I hope your weekend is off to a great start!

I started reading “Think & Trade like a Champion,” and have been inspired to keep more detailed statistics on my trades. I usually don’t like talking about the size of my trading account, but it will be necessary to highlight some of my findings.

The below screenshot of my excel spreadsheet highlights the key metrics I will be evaluating which is based on my ~2 years of trading.

I transferred the imported trade data from my broker (Charles Schwab), and manually entered each of my 175 trades including basic information like win/loss and percentage gain/loss on my account. I’m averaging about a 41% win rate with my wins nearly 4 times the size of my losses. Notice how although I put a hard stop loss at a 1% (rarely 2%) loss on my account, my average still comes out to well below that. This suggests that I’m cutting my losses before my stop loss is hit.

Lastly, I calculated my expectancy, which comes out to .67%. This means I should expect to gain .67% on average per trade that I take. In statistics or Poker, this “Expectancy” is equivalent to the Expected Value or E(X).

However, what’s interesting to note is that if we take out my Boeing trade (and PSEC trade) this year, the numbers look much worse. Since the Boeing trade was meant to be a longer multi-year hold, my position sizing was much larger.

Table below:

For reference, I made just over $28,000 on the Boeing trade, which was a 70% gain on my account value at the time (now my account is worth $120,000 because I transferred some money in). Also, note how my win to loss ratio is roughly 2.5 : 1 now instead of 4 : 1. Either way, the results are comforting because it seems like I’m trading properly (cutting losses without them getting too large).

Recently I’ve been feeling really bad when I lose 1% of my account on trades ($1,200). This can easily be explained by my average loss, which is only $231 (5 or 6 times less than I’m used to losing on average). However, as a percentage, it is still only slightly above my average loss, so I should start feeling more comfortable with the larger size trades. Perhaps a good adjustment would be to scale into my trades and risk less.

Lastly, I noticed at one point in February and March of 2018 that I had lost on 16 of 17 trades, which lead to a 10% – 15% drawdown on my account. The odds of this happening at my 40% win rate are nearly 1 in 4000, so it suggests that the market conditions changed. Taking a look at the chart of SPY in early 2018 suggests that perhaps my trading plan performs worse during sharp or rapid corrections.

This makes sense since I generally put in tighter stop losses in order to have a better risk/reward ratio. I’m still working on a fix for this, which is why I’ve exited all of my shorter term trades because the market is behaving similar to early 2018.

I exited my AAPL short position on Friday (and my XLF/SPY pairs trade) – weekly chart and analysis of AAPL below.

Because I think Apple has more downside potential than upside potential, I am cautious on the overall market. Although I think it’s more likely we move up early next week, the most likely scenario is we will be lower in 3-4 weeks because momentum is currently to the downside.

9/24/2020 Went long on FANG at 29.95 right near the close. Plan to hold for 1-2 weeks or less.

Hi everyone. The markets have been holding up surprisingly well this week despite many people expecting it to sell off (me included). 

I took a fairly large long position in FANG today. I got filled on only 80% of my order since it was placed minutes before the close. As a result, I’m putting roughly 0.8% of my account at risk instead of the intended 1%. There is some overnight and weekend gap risk, so not getting filled on the entire order is fine. 

Daily chart of FANG below. The RSI has made a higher low while the price has retested the previous low. I expect the price to close higher tomorrow, and if it doesn’t, I will likely exit the position. My stop loss is at 29, and profit exit is at 33. 

FANG daily 9_24_2020

 

9/20/2020 Indexes down a little this week. Covered TSLA short, and still holding AAPL short. Monthly bearish RSI divergence on SPY.

Hi everyone. I hope everything is going well. 

I find the current price action a bit concerning, but whenever I get this type of feeling, nothing terrible happens and it’s just a simple pullback. Although I am still net short, I plan to add longs aggressively once I think the pullback has ended (~10% lower).

Let’s look at QQQ since the largest holdings in this ETF are dragging down the market. 

QQQ weekly chart below – I think we move ~10% lower from here:QQQ weekly 9_20_2020

Monthly chart of SPY below. Notice the large monthly bearish RSI divergence building up. Unfortunately, there isn’t enough sample size to predict what will happen this time. 

Monthly divergence SPY 9_20_2020

Enjoy your Sunday, and see you next week like always.

 

Doubled short position on TSLA and made a tighter stop loss.

Hi everyone. I doubled my short position on TSLA at 450 today. My original stop loss on the 487 short was at 600, but moved the overall stop to 550 now, with a mental stop at the previous highs near 500. The overall risk on the trade is still the same or less than before.

If TSLA hits the maximum stop, it’s a 1.5% loss, while if I stop myself out a bit earlier near previous highs, it’s a loss of .5% to my account. 

I think there’s a good chance that TSLA powers upwards until Battery day on 9/22/2020, but the risk/reward to the downside is too juicy to pass up on for this trade. The trade idea fails if or when TSLA breaks to new highs, so that is when I will close the short position. I’m looking for a quick continuation of the downtrend here, so if it doesn’t happen within 2-3 weeks, I will exit the trade. 

TSLA Daily Pyramiding 9_15_2020

Have a nice rest of the week!