Option Trading Tutorials

Here are the trades that I put on and closed in 2012. I closed a total of 11 trades of which 7 were profitable and 4 lost money. Notice that even though I only had 7 winners and 4 losers the portfolio made money. That's the benefit of money management and good exit rules.


Entry Date
Trade
Target profit
Actual profit/loss
Notes
1/13/2012 Put Credit Spread (DIA) $78 $110 I entered this put spread with the idea of possibly adding a call spread to it. Overall the strategy worked very well.
2/21/2012 Iron Condor (SPY) $174  $198 Closed call side of the spread for $.12 (instead of $.19). Put side is closed now for a nice profit on this trade.
3/5/2012 Call Credit Spread (DIA) $100 -$8 This one didn't work out but because of my stop loss, I didn't lose too much.
3/29/2012 Put Credit Spread (SPY) $74 -$42 Another one that didn't work out but... guess what? That stop loss saved me from a larger loss again.
5/22/2012 Put Credit Spread (SPY) $70 -$62 Once again, a volatile market forced me to exit this trade.
6/7/2012 Iron Condor (DIA) $186 $156 This trade turned out mostly as expected. The trade was managed by closing early and locking in profit.
7/30/2012 Put Credit Spread (SPY) $73 $74  This trade again went as expected but took a little longer to develop. That's because I sold options with more than 30 days to expiration.
9/14/2012
Call Credit Spread ($1 wide)
$84
$84
This was a pairs trade with the $2 spread to determine which did better.
9/14/2012
Call Credit Spread ($2 wide)
$70
$70
Which trade did better? Depends on the commission you pay. In my case, when you count commissions, the basically performed the same.
10/05/2012 Iron Condor (DIA) $165 -$326 The trade didn't quite work out as planned, nor did the adjustment.
12/03/2012 Iron Condor (SPY) $189 $114 This trade was successful but only because I elected to close the trade early.

For trades entered and closed in 2011, check here.

While the point of these trade tutorials isn't necessarily to have each one turn into a winner, it's still nice to be able to track the result over time. While I've summarized the trades above, I want to provide a portfolio summary much like we would if we had a trade log. After all, it isn't really about how many winners or losers there are but what the equity curve looks like. The table below will show the cumulative result of closed trades. Note: This includes open debit orders so the balance may seem off sometimes.

Starting Date Starting Balance Current Balance Cumulative Gain/Loss % Portfolio Gain % Gain/Month
1/1/2012 $17,009 $17,377 $368 2.16 .18

As I continue to put on trades, how do I choose new strategies to trade? One way is through taking more of a portfolio management view. Check out this video to see an example of portfolio management in action.

Note: This trade discussion is for educational purposes only. I am NOT making any recommendations on the trade or the underlying stock or ETF. If you decide to follow this trade, please do so in a paper trading account. Trading options involves risk and some options strategies can result in losing more than the original amount invested.

thinkorswim, Division of TD Ameritrade, Inc. and Success With Options are separate, unaffiliated companies and are not responsible for each other's services and products.




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