March Report Card

The Bulls come out at the last minute and suck away most of my profits for the month. Profit $1,598.60. A 3% return on risk for March.

Preliminaries: February Report Card.

Yea, March was a bit disappointing, especially since I was in Vegas for some fun the Wednesday and Thursday before expiration of the March options on the SPX. I ended up monitoring the market pretty closely until 1pm PST each day. But it’s silly to complain. I got a higher return than most investors average in a month, and but for those last two days, it was mostly like watching grass grow for 5-10 minutes each day. Serious. My trading style requires very little time, attention, or stress for over 90% of the trading month.

Those tense times are fun. It’s a love, hate sort of thing. When my positions are attacked, I get all uptight about it. Then, I analyze, and when I act, I do so swiftly and decisively. Thus far, I’ve always come out not only protecting my ass on each roll of a position, but profiting more. Then, I sit back, light a smoke, and reflect on the combat and resolution.

So, here’s the March positions, and I’ve added dates and action from my February format. "STO" means sell to open; "BTO" means by to open; and when there’s a ‘C’ instead of an ‘O,’ we’re closing the position. Those positions that are open, but not closed, end up expiring worthless, i.e., STC and BTC at $0.

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As you can see, I’d have loved for my situation from 3/02 on to have just continued through to expiration on 3/16, without those two closing trades for large debits (red ink) you see at the top of the chart on the 15th and 16th. Without those, I’d have finished the month with a profit of $9,696 for a 20% return on risk. If if if… The market is never wrong, folks.

As you can see, I wisely shut down the 1300/1310 call on 3/15 for a debit of about $4,900. The SPX March options settled at 1310, so had I not shut down this position, my loss would have been $10,000. Had I not shut it down when I did, it probably would have taken a much higher debit than it did. So, I lost $5k, right? Well, no. Notice that when I opened the position on 2/16, I did so at a net credit of about $3k. So, my loss is $2k then, right? Well, no. As you’ll see below, I just took that maintenance (risk) and rolled it right into an additional 15 contracts of the 1315/1325 April call on 3/16 for a net credit of about $4,800. So, I didn’t lose anything. I simply delayed my profits for another month.

Here’s how April sits, at the moment, with expiration due for 4/19.

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Finally, here’s the anatomy of a roll, month by month. Notice I’m not only protecting the original profit of $1,000, but tripling it over the three months of rolls.

(click image for a clearer view)


This trade began at the new year, a 1280/1290 Jan call, and within
minutes of getting filled for a $1,000 credit, the market began
shooting up. Finally, when the SPX was at 1285 a week later, $5k into the money, I
rolled out for a debit of $6.5k, so net, I was down about $5.5k. But,
on the same day, 1/09, I rolled that to two positions, the Feb
1285/1295 for the same 10 contracts, and 5 contracts in the Feb
1300/1310. Total credit on both fills was $7.5k, so, I took a $5.5k net
loss and turned it into a $1,000 net gain after keeping my original
$1,000. And so on. See if you can follow. It currently sits for 12
contracts at the Apr 1315/1325. My guess it that I’ll have to roll this
again, but if I do, I intend to make another $1,000 for my trouble.

See you again next month, and we’ll see how April comes out. Do I get to keep my $20k, or do I have to give it back, temporarily, and wait for a May payday?

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