jay_beckner

I play poker and trade options, seeking edges from study, reflection and analytics.

Live Testing, FSLR and Takeaways

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Stats for the week ending January 19th:

  • Account value: $9,618.15 ($100.33) -1.03%
  • Change YTD: ($381.88) -3.82%
  • Opening trades: 3
  • Closing trades: 2
  • Open positions: 0

This week was mostly about process building. I continued learning the thinkorswim (tos) trading platform, dialing in the views I need to monitor the trade ideas generated by my proprietary analytics. Live testing my new trading framework was positive. However, I compounded the loss on my opening trade, the NFLX bear call spread.

With SPY accelerating upward on the weekly chart and the daily showing some deceleration, I approached the week cautiously bullish. I maintained that outlook except for a brief neutral/ bearish bias EOD Tuesday into Wednesday.

I spent time looking at charts that showed upward divergence, as indicated by the MACD Histogram, often comparing them to SPY and NFLX (as I watched that one get away from me higher). I started pricing options trades when the hourly charts aligned with my broader market thesis.

 A tos multi-chart view I created to watch the SPY and track individual stocks' key price levels and technicals. 

A tos multi-chart view I created to watch the SPY and track individual stocks' key price levels and technicals. 

My two in process trades performed very well. I sold a put spread below the market for NVDA stock on Tuesday. It expired worthless on Friday, never threatening a pullback, and I earned 22.5% on the trade's net margin required.

 A snap of this week's filled orders.

A snap of this week's filled orders.

The second trade was made during my brief neutral/ bearish stint. I sorted my curated list for stocks that would mirror SPY's technicals if it decided to turn lower, and FSLR was in that group. The stock traded upward to a resistance level and offered plenty of premium, so I sold a call spread above the market. The trade also earned the maximum profit, 29.3% on the net margin, as the spread expired worthless.

 FSLR chart array showing MACD convergence upward on the weekly chart and divergence lower on the daily and hourly charts.

FSLR chart array showing MACD convergence upward on the weekly chart and divergence lower on the daily and hourly charts.

Reviewing my cancelled orders told a couple interesting stories.

First, I missed a couple more opportunities for max profit credit spreads, on SRPT and TTWO. As I get more confident in my process, I can get a little more aggressive on getting fills.

Second, and I hate relearning this lesson, when you make a mistake, close the trade (or hedge according to your trading framework) and forget it. I started thinking about closing the bad NFLX trade on Wednesday when the market regained its footing. Late Thursday, I entered/ cancelled an order at $4.25, then another at $4.29. I ended up paying $4.79 at the open on Friday for the 5 point wide spread I sold for $1.25.

To make matters worse, I traded NFLX intraday Friday, via a debit call spread, shortly after closing the credit spread, and I posted a 68.1% loss on a perfectly mistimed entry/ exit. I also pulled an order for a smaller loss than I ended up taking. Tactically, go with your instinct when exiting a trade. When the order is in, don't cancel it, consider adjusting it to get filled, and move on.

Fix the errors above and the young year looks more like a constructive breakeven start versus a minor pothole. It's okay -- there are many positive takeaways from the week.

My notes on analytics (creative progress, data, roadmap), watch list curation, process/ scheduling and more will have to wait until next time! See: the pesky 24 hour limitation (and playoff football).

Good Setups, Tactical Improvement

Restart, Credit Spreads and NFLX