Dec 2016 Swing #1 – RUT

8 Dec 2016 – Entry

  1. RUT is trading at its 10 years high. Fed will be announcing it’s decision on interest rate on 14 Dec 2016, which market is expecting it to raise it’s interest rate from 0.50 to 0.75.
  2. With these two reasons, there is a chance that RUT to move downward next week in anticipation of the Fed announcement. So I decided to open a swing trade which will be closed latest on 14 Dec 2016 before the FOMC meeting at 2pm.
  3. Since it will be closed within next week, I have chosen options that will expire on 16 Dec 2016. This will give me the highest Theta possible. I have chosen the broken wing butterfly strategy because:
    • It is cheaper. I got it at 1.80 per Fly. With this my loss is capped at 180 per Fly even if it continues to move up and the option expired worthless.
    • If it moves downwards, the increasing IV will increase the option premium and also move into the profit zone, and I will have a chance to close the trade with a nice profit.
rut.png

Risk profit of the BWB during trade entry.

14 Dec 2016 – Exit

  1. RUT started to move downwards slowly from 12 Dec 2016. The underlying price movement did not generate profit. However the Theta had helped and by today, Theta and the increasing IV in anticipation of Fed announcement in a few hours time had helped generated enough profit for me to exit the trade.
  2. Bought the BWB at a debit of 1.80, and sold to close for a 3.50 credit.
  3. Nett profit for this trade 158.96 per Fly.
rut.png

This was captured after I closed the trade for a 3.50 credit. Always follow plan and book your profit, and never chase the maximum profit because you will never know when the trade could turn from a winner to a loser.

Nov 2016 Swing #2 – GOOGL

Day 1 – 28 Nov 2017 : Entry

googl1

Daily chart. GOOGL broke the mean after a series of price resistance at mean. However it still closed below the mean.

GOOGL2.png

5min chart. GOOGL started declining after lunch time.

  1. GOOGL broke the mean on the first hour of market open. The wave indicator at that point was around 1.7.
  2. This is a directional bullish trade. To reduce my exposure, I opened the Bull Put Spread for 4.00 credit per contract when GOOGL was trading around 793. The BPS gives me positive Theta if it stays above 780.
  3. I made the entry just before lunch time at 11:30am US EST and went to sleep. Then GOOGL started to decline around 2pm US EST, just after lunch time.
  4. This trade will have a higher probability of winning if it closes above the mean.

Day 3 – 30 Nov 2017

  1. GOOGL was still trading and closed at the mean on 29 Nov 2017, so I left the trade open.
  2. Today it started to decline and it came with volume. So I decided it is time to cut the loss and close the trade.

GOOGL.png

Trade Summary

  1. This is losing trade, nett loss of $140.56.
  2. The wave signal indicator not strong enough. For expensive stock like GOOGL, wave indicator should at least crosses 5.0.
  3. For directional trades that will be carried over more than one day, it is better to make the entry on second half of the market, best during last trading hour.

Nov 16 Swing #1 – CL

Day 1 – 18 Nov 2016 : Entry

  1. Wave indicator is approaching the zero line. I took the risk to enter instead of waiting for it to cross the zero line.
  2. I use the sell 90% OTM Put method learnt from the PPI course attended.
  3. Need to take note on the crude oil inventory data that is coming out on 23 Nov 2016. Usually this data will swing the price. If by 22 Nov 2016 this trade is still not profitable, or indicator showing sign of price moving downwards, I will close the trade before the data comes out.
cl

Daily chart when I made the entry

Day 1 – 18 Nov 2016 : Exit

  1. Less than 30min after entry, this trade already turned negative and the daily chart indicator seems to be more bearish than bullish.
  2. I took the decision to cut the loss while it is still small instead of waiting or hoping to recover the loss. This decision is also a training for myself to cut loss whenever the trade is not working and not to hope for anything.

Trade Summary

  1. A losing trade, with a nett $67.74 loss.
  2. This trade also proved that it is important to wait for more confirmation. In this trade, only enter when today’s candle indicator closed above zero.

Oct 2016 Swing #1 – GC

Day 1 – 27 October 2016

  1. This was a directional trade. GC has been trading at support for 5 days. One of my indicator (wave) has shown upward move so I decided to take the risk and enter LONG.
  2. However to reduce risk, I sold a PUT for positive theta, 90% OTM probability, and at least 90 days out.

gc

Day 5 – 1 November 2016

  1. Another indicator (squeeze) is finally also showing sign of upward move.
  2. It has reached my target return but since the indicators are still showing upward strength, I will keep trade open for now.

Day 6 – 2 November 2016

  1. GC is trading near the resistance around 1306 and there will be FOMC statement at 2pm EST later.
  2. Since it has already hit my target profit, I decided to close this trade and book the profit.

Trade Summary

  1. Winning trade, nett profit $284.52.