Daily Trading Journal For 2/24/2014

Welcome back for a fresh and exciting new trading week folks! Markets were sure feeling pretty good about themselves today, with fairly steep rises pretty much across the board. CNN Money tells us that “The S&P 500 rose to a new record high Monday as investors remain optimistic about the economy and corporate earnings.” Hmm, that’s not what they were just saying on Friday. These guys change their tune faster than the weatherman. Anyway, this is at least one investor who isn’t exactly overly optimistic about the macro economy. But we also let price action dictate our short-term trading, not our personal economic views. Let’s start with a look at a daily chart for the S&P500 index.

S&P500 daily chart for 2-24-2014 trading journal entry

As you can see from the above chart, all of the day’s sharp gains came in the first part of the day. This worked out well for us because we were not able to begin trading until the last half of the day. And by the time we were ready, the S&P was perfectly poised for a slow but steady afternoon bleed-off. Based on this belief we decided that the best approach to take advantage of the situation was using one-hour contracts, purchasing one after the other until market conditions changed. So that is exactly what we did.

Trade Summary For S&P500 High/Low Put Option

Trade Outcome: ITM
Entry Time / Expiry:
 17:39 / 18:00
Investment: $100
Returns Offered: 70%
Entry Rate / Expiry Rate: 1857.403 / 1856.670
Returns Received: $170.00
Profit/Loss: $70.00 Profit

traderush and thinkorswim charts for s&p500 trade 2-24

For this trade we wanted to include an overlay of the ThinkOrSwim charting software which we use for all but very short-term binary options trading (as we recommend you do as well) so that you could better see what it was we were basing our trading decision on. This doesn’t show the indicators that we use because it clutters the picture up too much but you can still pretty clearly see why we believed that price was very likely “rolling over” here. With hours left to go in the trading day, and such steep advances earlier, it was hard to imagine that the market could keep up such a pace. Nothing is sure in trading, of course, but we felt pretty darn confident in this thesis.

closing chart of first s&p500 trade for 2-24

The picture above shows this trade just prior to expiry, and as you can see it was comfortably into ITM territory by this time. And because the trend had continued, unbroken, with technical indicators still strongly suggesting further declines. If we go back up to the first chart we posted, the daily S&P500 index chart, we can see that in fact those declines only accelerated as the closing bell approached.

Trade Summary For S&P500 Put Option Trade #2

Trade Outcome: ITM
Entry Time / Expiry:
 17:59 / 18:30
Investment: $50
Returns Offered: 70%
Entry Rate / Expiry Rate: 1857.403 / 1856.670
Returns Received: $85.00
Profit/Loss: $35.00 Profit

opening of third s&p500 trade for 2-24-2014

Trade Summary For S&P500 Put Option Trade #3

Trade Outcome: ITM
Entry Time / Expiry:
 19:19 / 20:00
Investment: $50
Returns Offered: 70%
Entry Rate / Expiry Rate: 1855.760 / 1854.800
Returns Received: $85.00
Profit/Loss: $35.00 Profit

We kind of forgot to take screenshots for a bit there so the image above is actually of our third, and final trade of the day. As we said in the opening of this post, our plan was to keep purchasing the same S&P put contract until conditions changed, or US markets closed. And it worked out well for us as we went 3 for 3, though with cautious investments. We actually could have gotten in one more trade, and it would have been another winning trade. However, we did not take it because by this time chart conditions had changed, and that confidence level just wasn’t there any more. We decided to play it cautious. Let’s look at our daily totals then.

Daily Investments History Totals For 2-24-2014

Trades Made: Three (3) High/Low Contracts
Trade Outcomes:
 Three (3) ITM
Total Investments: $200.00
Total Returns Received: $340.00
Total Daily Profit/Loss: +$140 Daily Profit
Daily ROI: +70.0% Daily ROI

daily traderush investments history totals for 2-24-2014

A decent day all told. We certainly could have been more aggressive in our investment amounts for those last two trades, and done significantly better than we did as a result. And normally we probably would have, but we’ve been burned a few times recently and are probably still a bit overly “gun-shy,” so to speak. And that is a problem. You need to be able to take full advantage of the good times, so that you can withstand the inevitable bad when they come. Well, that’s all for today’s journal entry. See you next time and until then, trade smart and be lucky!

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Jason--AKA "BinaryBoss"--is a graduate of WSU with a degree in economics with a financial markets focus. In 2009 Jason left his job with Microsoft in his home state of Washington to pursue a life of self-employment.

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