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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.
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.
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.
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).