Trading Journal Entry For Thursday 4-10-2014

Well, hopefully you were either following our advice from yesterday, or were already bearishly inclined of your own accord. Because if you were taking on any long positions today in US equities, no matter how short-term, you were almost certainly losing money. If, however, you read our journal entry from yesterday and were inclined to play along, then like us you were probably making decent returns today. It wasn’t our best day of the last week or so, which has been a good week, but it was a pretty solid one nonetheless. It was obviously a slaughterhouse in the US markets today, with bulls getting ground down to hamburger for the first time in a while. But even more important than today’s action taken in isolation is the information which it potentially provides us about the future. We view today’s steep losses as a confirming move of the previous declines. Exactly what we’ve been waiting for. Normally here is where we would start off with a daily chart for the S&P500 index, but in this case we think that a 5-day overview is more instructive.

5-day s&p500 index chart for 4-10-2014

As you can see from the 5-day chart above, price has now dipped below the previous lows hit early Tuesday, before the aborted rally attempt into Wednesday. This is what we see as a move confirming the trend change which was started with those earlier declines from Friday through early Tuesday. Of course, there are no guarantees in financial markets (far from it) and we certainly won’t be taking our bearish thesis for granted in the coming days and weeks. A market in a potential trend reversal situation is a market which needs to be watched like a hawk if you want to maximize your profits.

Binary Options Trades For 4-10-2014

Moving on to our own trading for the day. We traded a mix of standard high/low contracts, and the GOptions ladder options contracts today, and made out quite well overall. We have just done amazingly well with ladder options ever since we started trading them a few weeks ago, when we switched our main account to GOptions. That “beginners luck” factor may be beginning to wear out though, because today’s ladder trades were not particularly impressive. Let’s take a look.

oil ladder option opening chart 4-10-2014

If you look at the image above, and find where our mouse pointer is aimed you will see where we made our trades. One contract were purchased as “above,” and one was purchased as a “below.” So if the expiry price would have been anywhere between those two lines all three contracts would have finished ITM. But you’ll notice we said “would have.” Instead price ended up rising up into the next level, so only one contract of the two finished ITM, which is a loss. But we also had several other trades for which we didn’t get chart snapshots, just the final expired trades image from our account. So we’ll just have to summarize all the totals below. And you can just look at our expired trades for all the details of each individual trade.

Ladder Option Trades Summary

Total Contracts Purchased: Five (5) * $25 Contracts
Ladder Trade Outcomes: Three (3) ITM + Two (2) OTM
Total Ladder Investments: $125.00
Total Returns Received: $108.15
Ladder Contracts Profit/Loss: – $16.85 Loss = – 13.48% Net ROI

daily ladder option investments history 4-10-2014

Our trades involving the standard high/low binary options contracts went decidedly better. Though still not perfectly. For these contracts today we made a total of five trades, with all of them being for our default $100 investment. Of those five contracts, four  finished ITM, and one finished OTM, for a decent net gain on the bunch. As is usually the case when we are making fundamentals-based trades, we stuck mostly to indices and other “macro” underlying assets. The S&P500 being our “go to” index for such things, the majority of our contracts were therefore purchased on it, and all of those finished solidly ITM by expiry.

faz short-banks mistake trade 4-10-2014

Our one bad trade was a play on FAZ-Short Banks, and was a mistake, ugh. This being an inverse contract, buying a call option is a bet on declining bank prices, while buying a put option is a bet on rising bank prices. We know this, but that didn’t stop us from accidentally hitting the wrong button and purchasing a put option (rising bank prices) when we meant to purchase a call option (falling bank prices). Clearly banks declined along with the rest of the market so this trade was lost from the moment we hit that button.

FAZ-Short Banks – High/Low Put Option Summary

Trade Outcome: OTM
Entry Time / Expiry:
 16:39 / 17:00
Investment: $100.00
Returns Offered: 77%
Entry Rate / Expiry Rate: 20.9950 / 21.2150
Returns Received: $0.00
Profit/Loss:  -$100.00 Total Loss

petrobras oil stock trade chart for 4-10-2014

Our only other non-S&P500 index trade today was on the Petrobras oil company stock, and was a purely technical play based on the recent price action. We simply felt that the run-up of the last hour was a bit too much too fast, considering all the recent gains in the oil sector which have already been logged. We have no qualms with prices going even higher in the medium to long-run. But on the 30-minute time frame which we were looking, at a short-term pullback from these heights seemed next to inevitable. And indeed we got our pullback for a solidly ITM finish by expiry.

Petrobras Stock Trade – High/Low Put Option Summary

Trade Outcome: ITM
Entry Time / Expiry:
 16:40 / 17:00
Investment: $100.00
Returns Offered: 76%
Entry Rate / Expiry Rate: 13.8750 / 13.8350
Returns Received: $176.00
Profit/Loss:  +$76.00 Profit

s&p500 index chart for all trades on 4-10-2014

Lastly of course is those S&P500 trades. Two contracts were purchased at the same time, just with different expiries, so they have the same opening chart. The one shown above was purchased separately about an hour later. These were all fundamental plays, but we went through all this pretty well earlier, so we’ll just move on to the summaries.

S&P500 Index Trade #1 – High/Low Put Option Summary

Trade Outcome: ITM
Entry Time / Expiry:
 16:59 / 17:30
Investment: $100.00
Returns Offered: 76%
Entry Rate / Expiry Rate: 1845.840 / 1842.090
Returns Received: $176.00
Profit/Loss:  +$76.00 Profit

s&p500 index chart for double contract trade 4-10-2014

The chart image above was taken immediately after our purchase of these last two contracts. One contract was purchased for the 16:30 expiry which is shown above, and the other contract was purchased with an expiry at the closing bell, which is 20:00 system time. We felt quite confident that prices would be lower by close, and only somewhat less confident about the shorter term contract. In the end, both turned out just fine.

S&P500 Index Trade #2 – High/Low Put Option Summary

Trade Outcome: ITM
Entry Time / Expiry:
 16:07 / 16:30
Investment: $100.00
Returns Offered: 76%
Entry Rate / Expiry Rate: 1851.310 / 1849.750
Returns Received: $176.00
Profit/Loss:  +$76.00 Profit

S&P500 Index Trade #3 – High/Low Put Option Summary

Trade Outcome: ITM
Entry Time / Expiry:
 16:07 / 20:00
Investment: $100.00
Returns Offered: 76%
Entry Rate / Expiry Rate: 1850.630 / 1833.840
Returns Received: $176.00
Profit/Loss:  +$76.00 Profit

standard trades investments history for 4-10-2014

Daily Investment Totals For 4/10/2014

Total Trades Entered: Five (5) High/Low + Five (5) Ladder Option
High/Low Trade Outcomes:
 Four (4) ITM + One (1) OTM
Ladder Option Outcomes: Three (3) ITM + Two (2) OTM
Total Investments: $625.00
Total Returns Received: $812.15
Total Daily Profit/Loss: +$187.15 Daily Profit
Daily ROI: +29.94% Daily Net ROI

Which now finally brings us to the totals for the day’s combined trading. It was obviously a pretty decent day overall, with only 3 losing trades out of 10 entered. But more important than today’s gains alone is what they do for our weekly numbers. With only one trading day left to go, this is shaping up to be our best week of the year so far. However, we do still have Friday to go, and Friday’s can be treacherous and unpredictable. Especially on the heels of such a dramatic day today. So our weekly numbers are far from secure yet. If market conditions look particularly unfavorable to us tomorrow we will probably just stay out of the market altogether. Stay safe out there!

Monday 7th Trades | Tuesday 8th Trades | Wednesday 9th Trades

traderush bitcoin registration banner

Leave a Reply

Your email address will not be published. Required fields are marked *