DarterBlue Posted October 6, 2019 Report Share Posted October 6, 2019 In another post, I had indicated that I felt the market had made a top. With that said, I also indicated I would probably short it. Below is what I did Thursday and Friday. On Thursday, tried to put close to $49,000 (using limit orders) to work in put options in the final hour on three indices: NASDAQ 100, S&P and Russell. Only the Russell contracts filled, so at the close I owned 14 of the Russell Puts, strike 144, Jan 2021 contracts, purchased at $11.85 for a total of $16,610.96 including commissions. I was down $300.96 on the position at the close Thursday evening. On Friday, for the second day in a row I put money to work on the short side. I bought 9 contracts of the S&P Puts, strike 270, Jan 2021, for 16.44 for a total of $14,826.70 including commissions. I also bought 2 of 12 contracts (the other 10 did not fill) of the QQQ Puts, strike 177, Jan 2021 for 13.50 each for a total cost of $2,511.20. Coupled with the Russell puts purchased on Thursday, the total money put to work was $33,948.86. Marked to market at the close Friday, they were worth $31,989 meaning that I was down $1,959.86 on the total position. I may try and purchase the 10 unfilled contracts early next week. Whether I do so or not depends on the market’s action on Monday and Tuesday. If it drifts higher on light volume, I will put the trade on. If it goes up or down in volatile fashion I will stand aside and let the current position ride till I either make money on it or reach a logical point to take my losses. With respect to the purchases, my confidence level is 55% that this trade will be successful. I normally do not trade unless I am at least that confident. By way of comparison last October when I shorted the market, I was 63% confident that that trade was going to be successful. Therefore, to be clear, I am not especially confident that this trade will work favorably. Why take it then? First it met my minimum criteria of 55%. Second, there is a clear exit point. The exit point is if one of the headline indices (DOW, S&P or NASDAQ indices) makes an all time closing high over the next two weeks. Even with the recent volatility these headline indices are not far from all time highs. In fact, they are all well within 5% of doing so. With that said, given the options purchased are long dated, the losses from this trade should be acceptable from a risk reward standpoint. I am bearish. However, there are a lot of factors at work that make a clear cut prediction very difficult. With that said, the backdrop has become more negative than it was during the summer months both from an economic and political standpoint. With that, I would not be surprised if the averages lose north of 10% before year end. If I am right, then my trade will be profitable. If I am wrong I will know and exit quickly given my loss taking strategy discussed in the prior paragraph. 4 Quote Link to comment Share on other sites More sharing options...
World Citizen Posted October 6, 2019 Report Share Posted October 6, 2019 After reading this I started to question if English is really my first language. Barely is what I came up with. Nice to have you back posting on the dark side @DarterBlue 2 Quote Link to comment Share on other sites More sharing options...
DarterBlue Posted October 6, 2019 Author Report Share Posted October 6, 2019 43 minutes ago, World Citizen said: After reading this I started to question if English is really my first language. Barely is what I came up with. Nice to have you back posting on the dark side @DarterBlue Only market posts, and only when I see a turning point. I have left the politics alone as I realize that opinions are very hardened on this board. No need to butt a wall, you will only get a massive headache. Quote Link to comment Share on other sites More sharing options...
DarterBlue Posted October 7, 2019 Author Report Share Posted October 7, 2019 On 10/6/2019 at 9:48 AM, DarterBlue said: I may try and purchase the 10 unfilled contracts early next week. Whether I do so or not depends on the market’s action on Monday and Tuesday. If it drifts higher on light volume, I will put the trade on. If it goes up or down in volatile fashion I will stand aside and let the current position ride till I either make money on it or reach a logical point to take my losses. I added the ten additional contracts of the QQQ, strike 177, Jan 2021 at a price of 12.32 today. With that, total invested in these puts amounts to $46,275.48 including commissions. At today's close I was up $573 on the day but down $1,386 in aggregate since commencing the trades. All things considered the market was fairly strong today given its big gains Thursday and Friday. My feelings about the trade are mildly, but not greatly positive. As of now, I plan on keeping it on a tight leash. Quote Link to comment Share on other sites More sharing options...
DarterBlue Posted October 13, 2019 Author Report Share Posted October 13, 2019 Stocks closed broadly higher on the day on higher volume Friday which took the averages into positive territory on the week. At day highs which occurred within the final half hour of the day, the averages were up very impressively with some sporting over 2% gains. However, in the final twenty minutes of trade, between .33% and .4% of the day’s gains were erased when POTUS Tweeted that a major first phase of a multi-phase trade deal had been struck with the Chinese. Notably absent from his Tweet were any details save one: the fact that we have “suspended” the October 15 tariffs. Still, at the close, the day’s gains were still very good and enough to put all the major indices into positive territory on the week. These gains ranged from 1.03% on the S&P 500 to 1.79% on the Russell 2000. On the week, the major indices showed gains ranging from .75% on the Russell to .93% on the NASDAQ. With the big gains on the day, my short options positions now sport a cumulative loss of $5,114.48. This represents 11% of the money put at risk and approximately 1% of my trading capital. At day highs, the losses were over $2,000 more. When I initiated these short positions, the loss exit strategy was to liquidate them if any of the headline indices (DOW, S&P 500 or NASDAQ) closed at an all-time high. At 3:30 pm, this was not that far off, as one was about 2% away from doing so. At the very least, my trades were ill timed. The proof of this is the losses they have now sustained. The best evidence that a trade is going to be successful is when it is profitable within days of being initiated. This has not been the case here. With that said, it is my intention to honor my stop loss goal. So, should the market show follow through on Friday’s exuberance, I will be back on the sidelines sometime this week. Quote Link to comment Share on other sites More sharing options...
DarterBlue Posted October 20, 2019 Author Report Share Posted October 20, 2019 Stocks closed out the week on a down note after threatening the July all-time highs made by several of the headline indices. The market opened slightly lower then sold off into the lunch hour when most of the indices bottomed at about 12:30 pm. However, the DOW did not hold its bottoming attempt and actually closed at day lows while the other indices cut their losses by up to an excess of 50% from day lows. One negative on the day was the fact that volume expanded which is a sign of distribution on down days. On a positive note, aside from the DOW which felt the effects of Boeing and Johnson and Johnson, the other indices closed well off day lows. As a result of the down day, I managed to recoup some of the losses on my positions Friday as I gained $1,535.50 on the day. Still, this leaves me with a loss $7,854 (for the week I lost over $2,600) on the positions which represents over 1.5% when expressed as a percentage of my trading capital. My thoughts are that yesterday’s weakness was neither particularly surprising since we were very near all-time highs (1+% to 3% away depending on the index), and since the losses, aside from the DOW’s were not particularly severe. As I type this, I expect that the averages will make a determined effort to surmount the July highs and their failure or success in doing so, will likely set the tone for the remainder of the year. I believe that the odds currently favor the bulls, but not by a wide margin. As I have previously said, if any of the indices make an all-time closing high, I will cover the entire puts position and take my losses. Quote Link to comment Share on other sites More sharing options...
ChimpGrip Posted October 20, 2019 Report Share Posted October 20, 2019 30 minutes ago, DarterBlue said: Stocks closed out the week on a down note after threatening the July all-time highs made by several of the headline indices. The market opened slightly lower then sold off into the lunch hour when most of the indices bottomed at about 12:30 pm. However, the DOW did not hold its bottoming attempt and actually closed at day lows while the other indices cut their losses by up to an excess of 50% from day lows. One negative on the day was the fact that volume expanded which is a sign of distribution on down days. On a positive note, aside from the DOW which felt the effects of Boeing and Johnson and Johnson, the other indices closed well off day lows. As a result of the down day, I managed to recoup some of the losses on my positions Friday as I gained $1,535.50 on the day. Still, this leaves me with a loss $7,854 (for the week I lost over $2,600) on the positions which represents over 1.5% when expressed as a percentage of my trading capital. My thoughts are that yesterday’s weakness was neither particularly surprising since we were very near all-time highs (1+% to 3% away depending on the index), and since the losses, aside from the DOW’s were not particularly severe. As I type this, I expect that the averages will make a determined effort to surmount the July highs and their failure or success in doing so, will likely set the tone for the remainder of the year. I believe that the odds currently favor the bulls, but not by a wide margin. As I have previously said, if any of the indices make an all-time closing high, I will cover the entire puts position and take my losses. Just an update on my education: I still plan on sitting for the CFA after school. In your experience, how hard would it be to bet on board at a smaller or medium-sized investment firm out of college? I still want to be an entrepreneur no matter what, but this is where I want to be until (if ever) a venture takes off. Quote Link to comment Share on other sites More sharing options...
DarterBlue Posted October 20, 2019 Author Report Share Posted October 20, 2019 39 minutes ago, ChimpGrip said: Just an update on my education: I still plan on sitting for the CFA after school. In your experience, how hard would it be to bet on board at a smaller or medium-sized investment firm out of college? I still want to be an entrepreneur no matter what, but this is where I want to be until (if ever) a venture takes off. It is very competitive. It helps if you know someone on the inside. If you don't, then you need to sell yourself. Be persistent in pursuing an interview and if and when you get one, make sure you do your homework and be prepared to ask questions that demonstrate you have done it. Good luck! A long time ago, I was your age once. 1 Quote Link to comment Share on other sites More sharing options...
NotBigdaddybloom Posted October 20, 2019 Report Share Posted October 20, 2019 My stock market take...take your condescending/patronizing attitude about this side of the house back to where your actual target audience is. I for one grow tired of you passing off the mixing of macro and a little micro into a hodge podge of cliche innuendos as some sort of insight into the economic well being of the financial markets. JMHO 1 Quote Link to comment Share on other sites More sharing options...
DarterBlue Posted October 20, 2019 Author Report Share Posted October 20, 2019 4 hours ago, NotBigdaddybloom said: My stock market take...take your condescending/patronizing attitude about this side of the house back to where your actual target audience is. I for one grow tired of you passing off the mixing of macro and a little micro into a hodge podge of cliche innuendos as some sort of insight into the economic well being of the financial markets. JMHO Dude, no one forces you to read it. Just my take. 1 Quote Link to comment Share on other sites More sharing options...
DarterBlue Posted October 27, 2019 Author Report Share Posted October 27, 2019 The stock market finished broadly higher on the day; despite this, the market is now only very mildly overbought as measured by the oscillator I use. A funny thing happened regarding my position decision criteria at the close. It is explained thus. My stop loss on the Put positions was as follows: if any of the more popular indices (DOW, S&P and NASDAQ indices) closed at an all-time high, then the positions would be closed out on the next trading day. Well, the NASDAQ 100 made an intra-day all-time high and closed at the July intra-day highs. This was not contemplated when I set up my rule. So, what do I do now? The answer is that I will close the positions Monday within the first half hour of trading with one exception. What is the exception? If the market losses more than a percent in value on any of the major indices within the first ten minutes of the trading day, I will hold the positions through lunch time and will decided based on whether the market rebounds or not whether I should still close the positions. I will post the final results of this bad trade after the close Monday assuming I close it. If it is not closed due to the market selling off, I will update the trade if and when I close it this week or on Friday if it is still open. It is clear that the market’s current bias is to the upside. When bad news is shrugged off (Amazon’s earnings miss and bad forecast) and good news cheered (announcements of progress in the China trade talks), it is a clear sign that for the short to intermediate term the market wants to go higher. Thus, in this environment, it is a losing proposition to be short. Back in late September, the market seemed to be rolling over. But that was a false signal. At the close of trade Friday, the options positions had a cumulative loss of $11,798.98. If I end up closing out no better than that, I will end up being in the red for the year. From a personal perspective that is not good given the market’s gains on the year. With that said, you win some and lose some. It is what it is. Quote Link to comment Share on other sites More sharing options...
rockinl Posted October 27, 2019 Report Share Posted October 27, 2019 Should I invest $50k in a index mutual fund? Quote Link to comment Share on other sites More sharing options...
DarterBlue Posted October 27, 2019 Author Report Share Posted October 27, 2019 1 hour ago, rockinl said: Should I invest $50k in a index mutual fund? I don't know what your situation is. With the market near all-time highs, I would be reluctant to do so. Better to dollar cost average in over time. But again, I don't know your situation or objectives. Quote Link to comment Share on other sites More sharing options...
DarterBlue Posted October 28, 2019 Author Report Share Posted October 28, 2019 NEW HIGHS: The S&P and NASDAQ 100 exploded to new, all-time highs at the open. Therefore, between 9:37 and 9:45 am I covered all my put option positions. My total loss on them (including $2,139.25 today) was $13,928.23. This did not prove to be a good trade and it has put me in the red for the year. But when you are wrong, the correct course of action is to take the loss. I have done so knowing I will live to fight another day. While today is a clear breakout (assuming the market hold up to the close), I am reluctant to go long at this stage for a variety of reasons and will stay on the sidelines at least for the next three trading days. If the market proves itself over this period, I may make a small long trade. 1 Quote Link to comment Share on other sites More sharing options...
Blueliner Posted October 28, 2019 Report Share Posted October 28, 2019 7 minutes ago, GardenStateBaller said: He will go down in history as THAT GUY!😎 The market is strong, and the reckoning is coming for the deep state. Keep up the strong-American work Mr. President. (hand.....salute). 2 Quote Link to comment Share on other sites More sharing options...
DarterBlue Posted October 28, 2019 Author Report Share Posted October 28, 2019 11 minutes ago, GardenStateBaller said: You guys are nuts. But I guess the world is made up of all types. 1 1 Quote Link to comment Share on other sites More sharing options...
Blueliner Posted October 28, 2019 Report Share Posted October 28, 2019 14 minutes ago, DarterBlue said: You guys are nuts. But I guess the world is made up of all types. I can't argue with this statement🤣 1 Quote Link to comment Share on other sites More sharing options...
DarterBlue Posted October 28, 2019 Author Report Share Posted October 28, 2019 4 hours ago, Blueliner said: I can't argue with this statement🤣 I am glad you realize you are a nut! Quote Link to comment Share on other sites More sharing options...
Blueliner Posted October 28, 2019 Report Share Posted October 28, 2019 3 minutes ago, DarterBlue said: I am glad you realize you are a nut! If that's the worst I do in my life, then I'm alright. 👍 1 1 Quote Link to comment Share on other sites More sharing options...
HSFBfan Posted October 29, 2019 Report Share Posted October 29, 2019 A Bull market is starting The signals are ‘loud and clear’ — a new bull market is underway, strategist says https://www.marketwatch.com/story/the-signals-are-loud-and-clear-a-new-bull-market-is-underway-strategist-says-2019-10-29?mod=home-page 1 Quote Link to comment Share on other sites More sharing options...
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