My Options Trading Unlocked – Newsletter 31 Oct 23

Newsletter – My Options Trading Unlocked : Insights for Tomorrow’s Profits

31 Oct 2023

Analysis of a Tough Month: Moving Forward with Positivity and Control

Read on, maybe I can inspire you to make November your best trading month

My goal is to share my journey and help you profit from options trading. I write about my thoughts on options trading and finance in general. I provide information about my trading and my insights, that could be helpful to you in options trading, especially focusing on applying strategies and what I anticipate in the stock market for the upcoming week. Every week I report on the status of my trading accounts.

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1. Thoughts and Opinions

“Analysis of a Tough Month: Moving Forward with Positivity and Control”

Don’t worry, I have no intention of writing a novel but you can’t deny that the story probably holds a lot of truth: this month has presented significant challenges for options traders, to say the least.

Market fluctuations, unforeseen and foreseen events can often lead to a tough trading environment, and this month was no exception. However, it is during these difficult times that we learn the most about ourselves as traders and the market as a whole. As a beginner, you might feel overwhelmed, but remember, even the most successful traders have faced tough times. The important thing is to use these experiences as stepping stones to become better.

The key to moving forward after a tough month lies in maintaining a positive attitude and continuing to improve our trading strategies. This includes taking the time to analyze what went wrong and what we could have done differently.

Just as I did with the $UNH Iron Condor : What were the factors that contributed to our losses? Were there any signs that we missed? By asking ourselves these questions and learning from our mistakes, we can become better, more informed traders. As a beginner and for advanced traders, this process is crucial because it helps build the foundation of your trading career. Hence the importance of journaling all steps of your trades. For some this is a great hurdle but don’t be afraid to ask for advice or seek guidance from more experienced traders.

Moreover, it is crucial to have a solid risk management strategy in place. This involves having a trading plan from the start, setting stop-loss orders to minimize losses and taking early profits when they are available. It also means being mindful of our position sizes and not taking on too much risk. By doing so, we can protect our trading capital and live to trade another day. As a beginner, risk management might seem like an unnecessary hassle, but it is the backbone of successful trading. Without it, you are setting yourself up for failure.

In conclusion, a tough month in options trading can be a valuable learning experience. By staying positive, continuously improving our trading strategies, and controlling our risk, we can come back stronger and more prepared for success in the future.

As a beginner, the journey might seem daunting, but remember, every successful trader was once in your shoes. Stay focused, keep learning, and don’t be afraid to take calculated risks. The road to success is paved with challenges, but with determination and the right plan and strategies, you can overcome them and achieve your trading goals.

Here’s to a better month November !

I want to highlight that this text is a deep dive into my personal experiences and insights after analysis of this tough month October, rather than a commentary on others. By opening up about my own journey and the lessons I’ve learned along the way, my hope is to foster a sense of connection and understanding with others who may be navigating similar challenges. The result is that I will be moving forward in my journey with plenty of positive expectancy and probabilistic control of my positions (smile).

In summary:

• Pay attention to events that can make share prices move a lot and make options trading challenging.
• Use losers as learning experiences and analysis topics to improve your trading strategies and skills.
• Maintain a positive attitude and have confidence in knowing what you have done makes sense
• Continuously improve your strategies, and have a solid risk management plan in place to succeed in future trades.

2. Overall Market Overview (Week from 23 – 31 Oct 23)

When I prepare for trading or following the market and my positions, I focus on two aspects : the general trend of the market with the indexes, mainly the SPX and the volatility of the stocks with the VIX. The reason why is clear: the general trend of the market and stock volatility are essential for options traders because they directly impact options pricing, influence trading strategies, and offer opportunities for risk management and profit generation in the dynamic world of options trading.

And then again, I don’t want to over-analyse too: but basically the SPX trend and VIX levels are not far away.

The SPX index closed down 31 points this week from 4224 to 4193. One can argue that the trend is still downwards, with lower highs and lower lows.

SPX Chart – SPX 4193 $

Market outlook for next week : I must agree with the saying nobody knows anything.

VIX Chart – VIX USD 18.14

The VIX is back down to 18.41 on this last day of October.

3. TOCF Portfolio Weekly Recap & Trading Plan

In order to optimize my time and provide the most value to you, I’ve made the decision to refrain from duplicating content from the Discord channels in my newsletter.

My focus needs to be primarily on improving my trade management skills and sharing my experiences with you. Rest assured, if you’re curious about any specific trades I’ve made, you can always find that information in the Discord channels.

When there is a particular trade I feel warrants a comprehensive analysis, similar to what I’ve done previously with UNH, I will definitely include all pertinent details and figures in the newsletter.

a. Results week (23 Oct – 31 Oct 23) & currently open positions:

Here is an overview for all accounts of the positions and results of last week :

b. Results for October 23 :

Here is an overview for all accounts of the results of October :

The target of $1350 for Oct 23 was not met by far with a net result of only $15. Closing 11 positions led to this result, you can see the distribution above. The profits (or losses) are always the sum of the results of the closed positions during that given month. With the open unrealised P/L of ($5189.00).

October 2023 :

• 📈 Set Goal $1350 : ⬜️ ⬜️ ⬜️ ⬜️ ⬜️ ⬜️ ⬜️ ⬜️ ⬜️ ⬜️ – finished above the monthly target $15 / $1350 (< 2%) 🔴
• Realised Net Profit/Loss : $15 ( not even close to the 2% I am aiming for as from October 23)
• Portfolio Net Liq value : € 63,770 (Monthly change 📈 : € -2749 or – 4,13 %) or in dollars (influence exchange rate!) $67501 (Monthly change 📉 : – $2860 or -4,06%)

Info – Interpretation of the exchange rate : I am from Europe and my base currency is euro. I am trading the US markets from a MEXEM account held in euros and from a Tastytrade account held in dollars. This means that I have and express my open positions and profits/losses of the US markets in dollars on both accounts. The Net Liq for me is only relevant in euros, taking into account the exchange rate (which sometimes is an advantage and sometimes not). This explains the difference in results between euros and dollars and for me the evolution of the Net Liq in euros is what matters ultimately.

I will keep my the trading goal for November at $1350.

Completely in accordance with my strategy. In case you missed it my strategy document or you hadn’t had the time yet, here is the link again to “Developing my strategy and profit goals guide”. Any thoughts or comments you may have on this trading strategy document, please don’t hesitate to email me or write them in the comments of the page.

c. My Trading Plan for upcoming week:

At portfolio level :

• The MX account is in euro en the TT accounts in USD.
• I have been aiming to keep a descent delta/theta ratio. I have corrected the spreadsheet in a way that holding long stock is now also part of the calculation making the Spy B weighted delta correct for the whole of the positions. The sum of the SPY Beta Weighted Deltas of my three accounts is 82.05 (meaning if the SPY goes up $1, my portfolio value will down up $82 and vice versa)
• I am aiming for a 1:2 ratio (or lower) with neutral delta/theta. My positions have made a nice recovery and after adjusting some positions where required, the delta/theta ratio is at 0,77 at the moment. A bit too high, due to the recent down move and the calculation adjustment for long stock.

Most of my open positions are in the red. This hasn’t improved this week, as for most other investors, overall positions are down : the unrealised P/L is down to $(5189).

At individual stock level :

• It looks $PYPL and $LYFT aren’t in for a quick recovery, so I will expect the battle to take longer than anticipated. I will start selling CCs aggressively after earnings of these stocks.
• I am looking to close the CC 99 strike, on AMD next Friday, and opening a new CC lowering the cost basis, now at $97.4, further. I wouldn’t mind keeping the stock and write a juicy CC.
• $FSR, my best performing option, is my biggest position and my biggest problem child at this moment. I need recovery above $5.

4. Weekly Watchlist

I will keep my attention to the open positions and I don’t intent to add any more given my current, relatively high allocation : AAPL, SOFI, AMD, MARA, LYFT, ORCL, UNH, SMCI, FSR, PYPL, IWM, MSFT, GOOGL

5. Other stuff – info & links

• Trading Options Wheel Strategy:
  • After the update of the Options Wheel Strategy Spreadsheet, also the strategy page was updated: https://www.tradingoptionscashflow.com/the-options-wheel-strategy-explained/
  • Updated DEMO video is published also today : https://youtu.be/oPGIx11PGfA
  • If you bought the earlier version, drop me an email and I’ll give you a free download of the updated version at no extra cost.

• A permanent project is to improve the page My Approach to a methodic Options Trading Strategy and Profit Goals. I am really hoping to exchange some thoughts with you all on this topic, so leave me your thoughts in the comments of that page!

• In case you missed this tweet – get your FREE pdf:

Whenever you’re ready, here are 3 ways I can help you to improve your option trading:

1. For the option traders still looking for a Trading Options Spreadsheet to track their results and improve their trading, check out the EASY “All In Trading Options Journal Spreadsheet”: the ONLY option trading journal designed to focus on parameter-based options trading and account management, as probabilistic-minded options traders like me like it. Checkout this article about the spreasdsheet, the multiple tutorials about the spreadsheet on my Youtube or read about the spreadsheet directly available in our webshop

2. If you are not a Free member of our discord yet : In our discord channels, we team-up with other like-minded option traders, with the aim to support each other and share valuable insights and ideas. I provide live comments, trade alerts, educational info and tools via our discord room. Join anytime ! here: http://discord.gg/cGW6xH4RNT
3. In case you haven’t found me on social media: I suggest to follow me on X @L2TradeOptions and on Youtube @TradingOptionsCashflow to pick up my latest content.

I hope that providing some insights in my trading and my thoughts, will trigger some thoughts and maybe ideas that will help you with your trading and helps to become an even more profitable options trader. Don’t hesitate to contact me to talk options.

Thanks for reading the TOCF Newsletter, a great weekend and happy trading!

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Let’s generate cash flow together !

P&K

Please do leave your thoughts below in the comments.