I have been growing my acct gradually over the past few months. And I have been fortunately to have 28 consecutive months of profits. These returns have been 10x+ above what Wall Street firms give themselves ridiculous bonuses for achieving. I am very pleased with these statistics. I even with a few major beatings in BSC and UST in March and Sept, respectively. About a week ago started building some major Theta positive calendars and credit spreads in anticipation of this 3 day weekend. I have been playing our consolidation pattern from November of SPX 800-1000 (Currently 800-890) very well.
I am most proficient in sideways or rangebound markets, as I have a predisposition is to mean reversion rather than one way breakouts. I also understand the Delta, Vega, Gamma, and Theta aspects of these trades very well. They make absolute sense to me. This market has forced me to improve at directional bias and delta adjustments. I feel like I have an edge in everything I do. I believe I am as good at my core strategies as ANYONE in the world. And further improve the consistency of my returns I am constantly improving my directional strategies to benefit my core strategies.
This is what leads me to this post. I am an avid podcast listener. Some of the podcasts I listen to from iTunes are:
The Real Story with Frank Curzio
Bloomberg on the Economy
Options A to Z
PIMCO Investment Outlook
The Mind of a Trader
ThinkorSwim Trader’s Lounge
Daily, Weekly, and Monthly I gain valuable insights. Some of which are new, some are reminders.
I was in the shower this evening and I was listening to Jeff Quinto’s podcast, The Electronic Trader. Mr. Quinto reminded me that the Deck is stacked in my favor. And it can be in anyone’s favor who is willing to acknowledge a few simple disciplines.
I agree the market is fixed – that the deck is stacked. I believe that the market is stacked in your favor.
In reality, the market is neutral, but, for those traders who do three things, the deck is stacked in their favor.
1. They consistently execute setups that have an edge;
2. They cut their losses when they are wrong; and
3. They exploit their gains when they are being rewarded.
If you start with an edge in your setups and you cut your losses and let your profits run, then the following is true:
* The market is designed to pay you money;
* A good trade works immediately and profoundly; and
* Any trade that does not work immediately and profoundly is suspect.
I have found a nice home with equity calendars and multi-strike calendars which are skewed in my favor, have high probability outcomes (statistically and chart), and offer 150-300% profit potentials in 30-55 day timeframes.
As I move into next week I am substantially delta positive, and Theta positive. As per my plan, I am Delta positive as we stay above SPX 800. The support has held, and as I don’t necessarily trust it as unemployment continues to worsen. I am ready to adjust. However, we are in much better shape in the credit markets that we were in Sept/Oct/Nov. If we rise or stay in place I am a winner. If we break 800 levels, My plan is to sell OTM call spreads in the SPY and adjust my OTM put credit spreads into a BWBs. This should offer me substantial Neg delta and positive theta positions to offset my positive deltas (calendars, individual equities, and highly discounted-high dividend paying Close-ended Mutual Funds).
Here is a sidebar: I just purchased Harry Dent Jr’s new book The Great Depression Ahead: How to Prosper in the Crash Following the Greatest Boom in History
This YouTube clip is pretty good at briefly discussion WHY I like his research and viewpoints. His predictions are not always correct… in 2004, he predicted Dow 40,000 by 2009. He admits he did not foresee the Credit Crisis which hit the Globe in 2007-08. He has many wrong prediction, however I still like his trend predictions, and cycle work. I also like the fact that he is not a dedicated bull or bear.