Mar 242016

drawdownIt has been nearly two months since my last post and I know that readers are wondering what happened to me. Did I blow up my account? Did I jump off a building? Is Aram just another one in the long list of flash-in-the-pan here today, gone tomorrow gurus? I have received countless emails from faithful readers inquiring about where I went. I thank all of you for those emails and concerns. It truly is a comforting thought to know that the work that goes into maintaining this site and writing these posts does not go unnoticed. Those of you that regularly view the Portfolio and Trading Results pages on this website know that I have been actively trading and keeping my positions updated on a regular basis. But what really happened and why have I not been posting the Weekly Portfolio Analysis? That is the subject of this post – the challenges that face many “part-time” traders and the toll that everyday issues in our lives can take on our ability to trade profitably.

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Nov 112015

mathsSuccessful options trading is based on understanding the statistical probabilities and using those probabilities to create an “edge”.  The Kelly Criterion is one method that traders use to determine the appropriate position sizing for a given trade. The underlying principle is that you should not put all of your money into a single trade, but rather put in an amount that is appropriate given the probable outcome of the trade and the impact that it may have on the overall account. However, position sizing is not the only use for the Kelly Criterion in trading options.

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Sep 072015

In last week’s Portfolio Analysis I briefly discussed an at-the-money straddle that I sold last week in /ES which proved to be extremely profitable. Today, I opened another /ES straddle, this time placing a protective put since I think this market still has significant downside risk.

Before I discuss this specific trade, I will first provide some background and context.

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Aug 252015

Market CrashFollowers of this blog may wonder where I disappeared to just as the markets collapsed in what will likely be another historic day in stock market history. Did my account blow up? Did I survive to see another day? Did I jump out of a 20-story building? Fortunately, none of those scenarios is how things played out. In reality, I am on a family vacation this week with limited internet access or time to trade.

I was not immune to yesterday’s meltdown and in full-disclosure will share with you my story below. Although not as dramatic or as painful as some, it still offers lessons that I think are valuable – at least to me. Continue reading »

Mar 272015

The short-lived increase in volatility this past Wednesday offered great opportunities for the disciplined and mechanical trader. On the other hand, it also presented great challenges to those of us that were holding short put options set to expire on Friday.  The past couple of days put my trading skills to the test. I failed miserably in what was ultimately a test of psychological and emotional control.

This article is a postscript to “Catching a Falling Knife” where I documented an NDX trade that I poorly executed earlier this week. In this post I will be detailing the thought process behind my second trade failure this week which occurred in SPX and will likely result in an overall loss for my trading during the month of March.

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