Trading Journal Entry For 3-24-2014

Well we got at least some of what we were looking for in today’s market action, with the S&P500 index finishing the day down about 9 points, or -0.49% at the closing bell. If things had gone all our way those declines would have been somewhat steeper, but we can live with this result. The reason that we are looking for some sharp declines here is that it would be a strong indicator of an imminent correction from the current elevated levels. An overdue pullback in our book. And were such a pullback event to occur, it would be a fantastic opportunity for binary options traders to pocket some good profits. An opportunity which we would be taking full advantage of.

daily chart S&P500 index for 3-24-2014

Our own performance was a bit better than the performance of the markets as a whole. But it was not as good as it could have or should have been either. One of our losing trades was one of those trades that, in hindsight at least, should not have been entered into at all. Nevertheless, overall it was a profitable day. And our ladder options trades, though small, treated us very well as we went 3-for-3 winning trades. They were all high-probability, low potential return-rate trades. One of the great things about ladder options is the ability to so precisely control your risk/reward profile. Today we are going to look at these ladder option trades first.

ladder option trade aud/usd chart 3-24-2014

We didn’t get screenshot’s for all three opening charts, just the one above on the first ladder trade we entered on the AUD/USD pair. But we did take a shot of our expired positions screen which summarizes all the trades and their outcomes. Is what we did on all three of these trades though is to take positions that were already fairly “safely” ITM at the time of entry, and therefore were much more likely to finish ITM. For the trade shown in the image above we purchased the “Below” contract at the 0.91243 Strike Price. As you can see above, price was actually halfway to the next Strike Price down (though rising) at the time of our entry. So even though the return rates offered on my ladder trades were all fairly small, they were also all quite high-probability for success, and well worth the risk.

Ladder Option Trades For 3/24/2014

AUD/USD Ladder Option Trade Summary

Trade Outcome: ITM
Ladder Trade Type:
 Below @ 0.91255
Entry Time / Expiry: 15:30 / 16:30
Investment Amount: $25.00
Returns Received: $43.79 = 75.16% Payout
Strike Rate / Expiry Rate: 0.91255 / 0.91201
Trade Profit/Loss: + $18.79 Profit

EUR/USD Ladder Option Trade Summary

Trade Outcome: ITM
Ladder Trade Type:
 Above @ 1.37826
Entry Time / Expiry: 15:30 / 16:30
Investment Amount: $25.00
Returns Received: $31.91 = 27.64% Payout
Strike Rate / Expiry Rate: 1.37826 / 1.37885
Trade Profit/Loss: + $6.91 Profit

Oil Ladder Option Trade Summary

Trade Outcome: ITM
Ladder Trade Type:
 Below @ 99.744
Entry Time / Expiry: 15:00 / 17:00
Investment Amount: $25.00
Returns Received: $38.57 = 54.28% Payout
Strike Rate / Expiry Rate: 99.744 / 99.475
Trade Profit/Loss: + $13.57 Profit

Ladder Option Trades Investment Totals

daily ladder option investments history 3-24-2014

Ladder Option Win/Loss Split: 3 / 0
Total Ladder Investments:
$75
Total Ladder Returns: $114.27
Daily Ladder Profit/Loss: +$39.27
Ladder Options Trades ROI: 52.36% ROI

So on an absolute basis we’re talking about a measly $40 bucks. Nothing to write home about. However, that was only because we invested so little in the trades. And that in turn is because we are still getting used to this contract variety and developing strategies around it. We’ve only been with GOptions for about a month now, since Traderush had to drop US clients, and they are the first broker we’ve been with that offered these great contracts. On a percentage basis we received a return of over 50% for just a few quick and low-risk trades, and that’s awesome. But that $40 isn’t going to cover much losses in the standard high/low category, so we had better take a look at how things went there today.

pair options trade for 3-24-2014

The first trade which we got ourselves into today was actually a pair options trade (we miss Stockpair since they booted US clients two weeks ago). And you can pretty well see what it was that we were trading on here. It’s pretty obvious that we were betting on a bit of a short-term pullback from here after such a rapid price run-up over the last hour. In fact the “reversion to the mean” play is a very common, and useful strategy for pair options trading. And as luck would have it, we did indeed get our pullback in price this time for a solid ITM finish to the trade.

AAPL v. GOOG Pair Options Trade – Put Option

Trade Outcome: ITM
Entry Time / Expiry:
 16:03 / 16:30
Investment: $100.00
Returns Offered: 74%
Entry Rate / Expiry Rate: 0.46655 / 0.46654
Returns Received: $174.00
Profit/Loss: +$74.00 Profit

aud/usd standard high/low trade for 3-24-2014

For our first standard high/low trade of the day we went to one of our favorite currency pairs, the AUD/USD pair. It was offering the fairly high return rate of 80%, and the chart setup looked reasonably good for a pullback in the very near future. A good enough combination of factors for us to put down a $100 investment on it anyway. The image above is showing the AUD/USD chart on a 12 hour window, with current price flirting with the previous highs. And doing so immediately after sharp gains made the case even stronger. But theory aside, how did it actually turn out? As a big fat loser, that’s how. There was nothing wrong with the trade, no mistake to learn from here, just a bad break at the last-minute. It happens.

AUD/USD Forex Trade – High/Low Put Option

Trade Outcome: OTM
Entry Time / Expiry:
 17:30 / 17:45
Investment: $100.00
Returns Offered: 80%
Entry Rate / Expiry Rate: 0.91282 / 0.91352
Returns Received: $0.00
Profit/Loss: -$100.00 Loss

las vegas sands stock trade for 3-24-2014

Just minutes after opening the trade above we entered into a second trade, this time on the US stock of the Las Vegas Sands. This was also done on a 12 hour chart, and was obviously a play in the other direction, working with the overall trend of the US markets at that time. We almost as easily could have made this a put option trade, but that would have been counter-trend so we just took the plunge and got in for a $100 trade. It was the right move. This stock price was lifted along with most others as the major US indices gained ground throughout the afternoon, placing our trade safely ITM by expiry.

Las Vegas Sands Trade – High/Low Put Option

Trade Outcome: ITM
Entry Time / Expiry:
 17:34 / 18:00
Investment: $100.00
Returns Offered: 77%
Entry Rate / Expiry Rate: 79.9200 / 79.9650
Returns Received: $177.00
Profit/Loss: +$77.00 Profit

chart for boeing stock trade 3-24-2014

Ah Boeing, from our home state of Washington. As you can see in the chart above the stock had done pretty nicely so far today, despite markets overall being down. But it had run up pretty fast, and price appeared to possibly be “rolling over” into a downward leg. That was our theory going into it anyway. It was a totally bunk theory, however, and should not have passed our smell test. This was that “mistake” we mentioned in the opening of this entry. There was a few things wrong here but the most important of them is that this trade was counter-trend twice over. By this time of the day broader market measures were all rising, and it goes without saying that the trend for this stock in particular was also upward. So, “rolling over” evidence or not we had no real business getting into this trade without more compelling evidence for it. That’s what we get for betting against the home team I guess.

Boeing Stock Trade – High/Low Put Option

Trade Outcome: OTM
Entry Time / Expiry:
 19:08 / 19:30
Investment: $100.00
Returns Offered: 72%
Entry Rate / Expiry Rate: 123.560 / 123.830
Returns Received: $0.00
Profit/Loss: -$100.00 Loss

s&p500 index trade chart for 3-24-2014

Last, but never least is the S&P500 index, our favorite proxy for overall US market conditions. This trade was made heading into the final 30 minutes of the trading day, after the major indices had experienced a sharp price run-up in just the last 20 minutes or so. Too sharp of a run-up considering the general market trend of the day. The moment this run-up showed signs of faltering we tried to get in on a put option trade as quickly as possible, at as high a level as possible. We actually didn’t get in as quick as we would have liked or at the price we would have liked, and it very well could have cost us the trade. But it didn’t.

S&P500 Index Trade – High/Low Put Option

Trade Outcome: ITM
Entry Time / Expiry:
 19:34 / 20:00
Investment: $100.00
Returns Offered: 76%
Entry Rate / Expiry Rate: 1861.850 / 1858.160
Returns Received: $176.00
Profit/Loss: +$76.00 Profit

Which finally brings us to our totals for the day, whew! We made a total of five standard high/low options, with one of them being a pair options contract, and three ladder option trades. The high/low trades were a 3/2 win/loss split, and for the ladder options we went 3/0. All-in-all it was an acceptable, but not spectacular day for our account. Certainly better than last week’s start at least. But let’s see what the day’s totals are.

Daily Investment Totals For 3/24/2014

daily investment history totals for high/low trades 3-24-2014

Total Ladder Investments: $75
Total Ladder Returns: $114.27
Daily Ladder Profit/Loss: +$39.27

Standard Trades Entered: Five (5) Standard High/Low
High/Low Trade Outcomes:
 Three (3) ITM + Two (2) OTM
High/Low Investments: $500.00
High/Low Returns Received: $527.00
High/Low Profit/Loss: +$27.00

Total Daily Profit/Loss: $27.00 + $39.27 = $66.27
Total Daily ROI: +11.53%

Not a particularly impressive outcome. But any profit at all is definitely better than any loss at all, so we’ll take it and move on. Hopefully today’s market action was just the beginning, and further volatility is coming to a market near us soon. But until then, trade smart and be lucky all!

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