February Trading Results

Time again for my latest portfolio results, this time for the February expiration month. As always, I will break down the sources of my portfolio results so that you can keep track of how each strategy is doing. Beyond the actual numbers, this report is meant to give you an over-the-shoulder look into my trading and the lessons I’ve learned.

Why?

For several reasons:

1. To keep me headed in the right direction. Sure, I could keep this all to myself but sharing this information publicly helps to hold me accountable and continue to try and outdo myself.

2. I want to be honest and transparent. If anyone talks about making money trading options, I think that’s really the only way it should be. Wins, losses, successes and failures – the whole deal.

3. I know it inspires a lot of people to take action.

You can access previous portfolio results via the links below:

Total Capital

Important Events in February

 

In February I decided to get back to basics a little bit after a disappointing performance in January and a couple of bad trades in December. Looking back over my results from the last few months I have been making around 13-15 trades per month which for me is too high. Some of this overtrading has been due to wanting to try new things and also perhaps looking for trades that perhaps weren’t there rather than being patient. This month I only place 9 trades and was able to have more focus on those trades. I think this will be my plan going forward, fewer trades, but slightly increased capital at risk per trade (provided it fits my money management rules).
During February, the S&P 500 moved up from 1315 to 1361 for a return of +3.50%.

SPX

Going into February expiration, I was fairly bearish given the market had been overbought for a few weeks and was coming up on significant resistance. As such I ran into a bit of trouble with my RUT Iron Condor as I had structured it with a bearish skew. I ended up scaling into my position to the point where I had a large exposure (30 contracts each side). When the market rallied on Feb 1st and 2nd, I was right around my adjustment points but decided to hold on given that we were right at major resistance and extremely overbought. Then, the next morning there was a fantastic jobs report and the market gapped higher and RUT closed up +2.25%. By averaging into the trade my average cost was $1.04 and my major adjustment rule saw me needing to adjust this trade if the call spread got to around $3.15. At one point the spread traded as high as $4.20 on Feb 3rd and I was very close to rolling the calls up and out. At one point, I was sitting on unrealized losses of about $7,000. However, I felt so strongly that the market would pullback / consolidate that I held on. I also felt like the gap up was an exhaustion gap as who was left to buy at that point?? The next 4 trading days were flat to slightly down but I was fairly nervous given the large exposure I had. Then on Feb 10th RUT dropped -1.45% and things were looking significantly better. From that point on the trade was fairly safe, but I did close out half of my call spreads later that week as after the stress of the previous week, I didn’t want the trade turning into a loser again. RUT settlement for February was at 833 and my short strikes were at 840 so it was a close call but I got there in the end. Over the last week of expiration my account fluctuated by around $10,000. But, I had said I wanted to increase my risk a bit this year….
Based on the above, you will notice that I broke my trading rules by not adjusting the calls when they traded above $3.15, so it kind of calls into question my entire trading plan. What’s the point in having a plan if I’m not going to follow it??! Maybe my plan needs some tweaking to allow more flexibility on the call side, which is something I will play around with. The market tends to fall quicker than it rises so I need to be strict with my rules on the put side. I’m looking forward to the next test of my trading rules to see how I perform, although hopefully it won’t happen again for a few more months…. I don’t need the stress.

Trading Results

Portfolio Results

Iron Condors and Credit Spreads were again the standout performer returning a gain of +$4,044, the rest of my trading was pretty light as mentioned above. Overall I was +3,748.20 for a return of +2.76%

February Results Breakdown

I appreciate you taking the time to stop by and read my articles and results. If you have any questions, please email me at info@optionstradingiq.com.

Here’s to your ultimate success!

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