May 2019 is over. For many this month was very difficult and a lot of people lost money, that was at least, what I have read in Facebook Groups. Of course, there were savvy traders and investors who made money in this volatile market. I made money too.
In this month I met the goal as planned. I was very careful to follow the plan and trade as described in my goal plan. Following the rules strictly helped a lot to no lose. Although, the end of the month was very shaky and I was very afraid of what the outcome may have been, I started even panicking at some point and started adjusting my last week trade too much. I noticed that and stopped doing it. Sometimes, it pays to really do nothing but it is easy said than done.
May 2019 results:
In May I stuck to the rules to the tee! No rules broken, no violations! I started also trading increased number of contracts. My first month going with 10 contracts and going up to 16. It was scary at first. I was well aware that increasing the contracts would bring more Premium but also wipe out more of the previous gains should the trade go bad. But that was a risk I was OK to take to grow my account into independence.
I learned another thing which at first I considered negligible – fees. Once I started trading larger amount of contracts, I realized that with the fees (even though low fees compared to others) I will not be able to meet my goal as planned. I had to adjust my minimum premium to account for the fees if I wanted to stay on track. So I decided to increase the minimum premium collected to 0.35 from 0.30 a contract.
Monthly long term trading strategy
Another adjustment to the trading was adding a long term Iron Condors. I decided to split the buying power allowed to trade between the short term trades (3 – 4 DTE) and long term trades (50 – 60 DTE). But the traded buying power of both combined trades shall never exceed the total allowed buying power.
Here is how I will be trading those long term trades:
1) DTE shall be 50 or more.
2) The IC width shall be 25.
3) The collected premium shall be $3 or more, the more the better (12% of margin)
4) The short delta 10 or less as long as collected premium is $3 or more. If a premium at delta 10 is less than $3, increase DTE.
5) Adjust the trade up or down if any short strike reaches delta 30.
6) Close the trade to collect minimum of $1.25 or more (5% of margin).
Here is an example of a first trade I opened in this manner. My goal is to hold this trade no longer than a month. That means, I want to be opening this kind of trade every month. If it cannot be done, I will probably stop trading these long term trades. I do not know yet.
The adjustments for these kind of trades will be only rolling the tested side (delta 30) down or up and moving the untested side closer to offset any debit needed to roll. But, as soon as the trade reaches the minimum credit, I will be out and immediately opening a new trade.
Here are the results:
In May 2019 I met all goals as planned:
1) Starting value was as per the plan
2) Number of traded contracts was as per the plan
3) Monthly premium collected exceeded the plan (the plan was $1,680.00, collected premium was $2,690.00)
4) Monhtly deposits slightly exceeded the plan (the plan was $2,600.00, deposits were $2690.00)
5) The ending value was slightly below the plan (the plan was $14,342.00, final value ended at $14,337.00)
The shortage was caused by fees and due to the plan adjustments in the middle of the month. But overall, I consider May as accomplished per the plan.
May 2019 trades:
Here is a link to my live 5 year plan spreadsheet.
Weekly short term trading strategy
Here is a reminder of my strategy and way how to trade (simplified):
1) open a new trade on Tuesday morning only
2) open with the same week Friday expiration (3 DTE)
3) collect min. 0.30 credit
4) no wider than $5 per trade
5) multiple contracts based on BP
6) let it expire
7) wings at 5 delta or near as long as credit is 0.30
8 ) close one half of the position if the loss reaches $1.00
9) close everything if the loss reaches $1.50
10) if the market swoons through $1.00 and reaches $1.50 or even swings further, close everything.
with 5 delta, (2 SD) the swings still may happen (you never know what crazy people would do on Wall Street) but the breach is very rare. It still may happen, everything may happen, but it should happen occasionally, when panic hits…
Previous posts related to this plan:
My 5-year Plan to Freedom Update – May 22, 2019
April 2019 financial freedom report – May 05, 2019
Fed up with my own lack of discipline, putting down a plan to reach FI – April 17, 2019