Trading Journal Entry For 2/03/2014

It was a good day to be a bearish binary options trader. We mentioned last week that we expected to see some more declines this week, but also that we expected a fairly high-volatility week with some rebounds. We still expect to see a rebound upwards at some point this week so watch out for that. However, there is still plenty of opportunity for profitable bearish plays this week, and we fully intend to take advantage of them.

Although US markets are not yet closed, our trading for the day is. We want to see how the day finishes up today, and how things open tomorrow before we consider our next positions. So, let’s get on with it and cover today’s trades shall we?

traderush trading journal trade from feb. 3rd facebook and s&p500

We made two trades today, both standard high/low binary options contracts. The first one we opened up was the S&P500 trade. This trade was entered into based on our overall bearish analysis (on both a fundamental and technical level) of US, and indeed global markets. Of course any time you enter into a trade with such a short-dated expiry you should be putting the most weight behind technical analysis, as the fundamentals don’t mean much over the course of an hour or two. But it is nice when they are both in agreement as was the case today.

Based on the above analysis we purchased a binary Put option contract on the S&P500 at 19:24 for $133, offering a return rate of 70% (fairly low but still worth it by our analysis), and with an expiry of 20:00. We could have purchase it with a 19:30 expiry but with the fundamentals being on our side as well more time means more opportunity for them to play a role.

screenshot of closing facebook and s&p 500 trades at traderush for 2/3

Shortly after entering into the S&P500 trade we opened a second trade which was meant to compliment the first one, as well as our overall analysis. The opposite of a hedge. We were about as confident in our analysis as you can get when you’re talking about short-term market speculation and we wanted to capitalize on the opportunity. Most days you will not have such strong convictions so when you do, run with it.

We feel that the position of FB stock right now leaves it very sensitive to broader market movements and sentiment. Normally for a play like this we might go with shorting a bank, or buying FAZ-Short Banks. However, Facebook stock is something of a “dog” in our eyes right now and we felt that it had a better chance of following any market declines than the banks today. Based on that we purchased a $100 Put contract on FB at 19:25, with a payout of 70% and expiring at 20:00. The image above shows how these trades were going just a bit before expiry. Looking good so far.

image of our traderush investments history for 2/3/2014

Looking good at the end as well. Nice! Both trades finished safely in-the-money (ITM) and made for a decently profitable day. Our main trade on the S&P500 gave us a return of $226.10 on our $133 investment (70% profit). And our Facebook trade paid out $170 on our $100 even investment for a profit of $70. This gives up a grand total of a $163.10 profit for the day. We won’t be retiring any earlier, but for less than 30 minutes work, that will do quite nicely thank you. See you next time!

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