Trading Journal Entry For Friday 4-25-2014

Today’s pullback  makes three. Today’s action has confirmed Tuesday’s peak and marks the third time in as many weeks that the major US indices have made a run at the highs and failed. If I were of a bullish inclination that would certainly worry me. Luckily I am already bearishly inclined so that isn’t a problem. This is actually the first time that we have had the chance to trade and post to our trading journal in over a week due to some other priorities that must be addressed. We did, however, get in a little trading today so we may as well report on it. Although it wasn’t particularly impressive trading. Taking a look at the S&P500 index in the daily chart below we can see that it finished up well below that 1880 level which many technical analysts have been talking about and watching.

daily chart s&p500 index for 4-25-2014


For our trading today we kept it fairly light, making just two standard high/low trades, and one ladder option trade consisting of four separate contracts of $25 each. Both of the high/low trades were made on major US indices for an end-of-day expiry based on our fundamental views, rather than the current technical picture at the time of purchase. Unfortunately most of the day’s declines took place before we ever even started trading, so we were lucky to get a 1-and-1 split even rather than a total loss. Let’s take a look shall we?

s&p500 index trade for 4-25-2014

S&P500 Index Trade Summary – High/Low Put Option

Trade Outcome: ITM
Entry Time / Expiry: 18:09 / 20:00
Investment: $100.00
Returns Offered: 76%
Entry Rate / Expiry Rate: 1863.050 / 1862.840
Returns Received: $176.00
Profit/Loss:  +$76.00 Profit

dow index trade for 4-25-2014

DOW Index Trade Summary – High/Low Put Option

Trade Outcome: ITM
Entry Time / Expiry: 18:09 / 20:00
Investment: $100.00
Returns Offered: 76%
Entry Rate / Expiry Rate: 16352.60 / 16363.42
Returns Received: $0.00
Profit/Loss:  -$100.00 Loss

That amounts to some mild losses for those trades. The ladder option trade went somewhat better but as far as absolute profits earned it still doesn’t amount too much. Not even enough to offset the minimal standard trade losses. The trades below can actually be considered to be one single trade, with four separate contracts. Two are purchased above current price as “Below” contracts, and the other two are purchased above the current price as “Above” contracts. This is part of a simple ladder option strategy we have been working on developing for ourselves. Let’s look at the ladder option chart for oil at the time of our trade.


ladder options oil trades chart for 4-25-2014

Ladder Option Oil Trades Summary

Total Contracts Purchased: Four (4) * $25 Contracts
Ladder Trade Outcomes: Two (2) ITM + Two (2) TIE
Total Ladder Investments: $100.00
Total Returns Received: $114.07
Ladder Contracts Profit/Loss: +$14.07 Profit = +14.07% Net ROI

ladder option trade outcomes for 4-25-2014

Daily Investment Totals For 4/25/2014

Total Trades: Two (2) Standard High/Low + Four (4) Ladder Contract
Standard Trade Outcomes:
 One (1) ITM + One (1) OTM
Ladder Contract Outcomes: Two (2) ITM + Two (2) TIE
Total Investments: $300.00
Total Returns Received: $290.07
Total Daily Profit/Loss: -$9.93 Daily Loss
Daily ROI: -3.31% Daily Net ROI

Well, so it turns out that today was actually a very small loss instead of the very small gain we thought it was before adding it all up. Not that we can get too upset over a whopping ten bucks, but profits are always nicer of course. Unfortunately we can’t be sure when we will have more time to ourselves for trading and publishing of our trading journal, but it certainly won’t be daily for the next month or so anyway. We will try as often as we can though. So until next time folks, trade smart and be lucky!

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