The bulls were finally able to wrest control of US indices today, which posted their largest gains in nearly two weeks by the time the closing bell rang out. And unlike yesterday, today’s action most definitely did change the technical picture, with things tipping back to favoring the bullish thesis, for now. Personally, we won’t be “pushing in” (a poker term) long any time soon, and neither should you if you value your account balance. Caution would be the name of the game now. And until markets can provide us with some more conclusive information either way, things will remain that way. Which is exactly why we got in and out of the markets early today, with only a brief window of trading where we felt things were in our favor. But before moving on to our specific trades for the day, let’s look at that daily chart for the S&P500 index first.
For our own trading today we did not do quite as well as the last few days, but we still added a daily profit to the account so that’s alright then. After all, not every day can be a big winner. As hard as we might try to make it so, life just doesn’t work that way unfortunately. So we’ll take our modest profit for the day and be happy with it, as modest daily profits are surely much better than modest daily losses! Today we made all of our trades on our main GOptions account. We made three standard high/low trades, and three ladder option trades totaling four $25 contracts. All trades but one of the high/low contracts finished ITM. We’ll start with the ladder option trades.
Unfortunately, we forgot to snap a screenshot of the EUR/USD trade chart at the time of opening these trades (they were all purchased within seconds of each other). These were all purchased as short-term contracts that were already well into ITM territory, and were therefore relatively high-probability trades. Of course, high-probability is still no guarantee of success, but in this case success was in fact the outcome.
EUR/USD Ladder Option Trades Summary
Total Contracts Purchased: Four (4) * $25 Contracts
Ladder Trade Outcomes: Four (4) ITM
Total Ladder Investments: $100.00
Total Returns Received: $135.13
Ladder Contracts Profit/Loss: + $35.13 Profit = 35.13% Net Returns
The three standard high/low trades we made today were all entirely technical in nature, with market fundamentals playing no part in any of them. That being the case we purchased them all with the shortest available expiry windows, with 28 minutes being the longest duration contract. The AUD/USD pair shown in the image above (taken at the time of purchase) was our first trade, made as a “bottom bounce” play on the pair, as it appeared to be just coming up off some daily lows. But alas, what we thought was getting in early on the move, actually turned out to be “jumping the gun,” and falling victim to some random noise.
AUD/USD Pair High/Low Call Option Summary
Trade Outcome: OTM
Entry Time / Expiry: 17:01 / 17:15
Returns Offered: 80%
Entry Rate / Expiry Rate: 0.93561 / 0.93548
Returns Received: $0.00
Profit/Loss: -$100.00 Total Loss
Corn was our next
victim trade. You can’t really see what we were trading on with this chart because there just isn’t enough detail but on the 30 minute window you can see what looks like a pretty convincing turn off the bottom here. Enough so that we felt there was a good chance of it lasting at least the 25 or so minutes which we needed it to last. The return rate offered wasn’t all that attractive at 72%, but we still felt good enough about the trade to put a $100 down on it. And good thing we did, because this one finished well ITM by expiry.
AUD/USD Pair High/Low Call Option Summary
Trade Outcome: ITM
Entry Time / Expiry: 17:02 / 17:30
Returns Offered: 72%
Entry Rate / Expiry Rate: 502.6250 / 504.6250
Returns Received: $172.00
Profit/Loss: +$72.00 Profit
Last up for the day, our “go to” index for broad market plays, the S&P500 of course. This trade has treated us especially well for the last few days, when markets were still declining. We’ve grown much more cautious now though. Cautious or not though, this trade felt good to us, and we went with it. Normally we wouldn’t feel comfortable going counter-trend like this, and would not advise readers to do so, but since we were able to get it with a 20 minute expiry window it was a reasonable chance to take. And, despite the fact that markets continued to rise for the rest of the day, this trade did indeed work out, with counter-trend correction holding for just a bit longer than the 20 minutes we needed it to. It was a darn close call in the end, but it made it. Whew!
Daily Investment Totals For 4/09/2014
Total Trades Entered: Three (3) High/Low + Three (3) Ladder Option
High/Low Trade Outcomes: Two (2) ITM + One (1) OTM
Ladder Option Outcomes: Three (3) ITM
Total Investments: $400.00
Total Returns Received: $483.13
Total Daily Profit/Loss: +$83.13 Daily Profit
Daily ROI: +20.78% Daily Net ROI
Not quite as impressive as the last few trading sessions, but a 20%+ daily ROI is certainly nothing to complain about. Not only that, but we only spent about 15-20 minutes between chart analysis and actual trading combined today. So a pretty easy $80 at least. We just didn’t feel confident enough in the markets being cooperative with us today to keep going and push our luck. We simply decided it was in our best interest to quit while we were ahead today, and come back to fight another day tomorrow.