Time again for my latest portfolio results, this time for the May expiration month. As always, I will break down the sources of my 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.
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:
Iron Condors and Credit Spreads were a poor performer for the first time in a while. The rest of my trading was pretty light.
Important Events in May
May was my first losing month since August 2011, primarily due to one trade in GDX. For the month I was -$3,340.25 for a return of -2.39%. During the same period, the S&P 500 moved from 1378.53 to 1295.22 for a return of -6.04%, so at least I outperformed the market, but that is a small consolation. For the year I am +2.79% versus +2.99% for the S&P 500. After 5 months of the year, I am a bit behind my goal of 1-2% per month so I need to pick up my game over the next few months.
My RUT monthly iron condor continues to do well, with a profit of $1,714 this month. Can’t remember the last time I had a loss on this trade.
An AAPL iron condor was looking really good, until I got too aggressive and rolled the puts higher which turned a $650 profit into a $450 loss. This was particularly disappointing as the entry point initially was near perfect as implied volatility hit 45% and then dropped to 30% a few days later.
The main culprit for my poor performance in May was a GDX Bull Put Spread that lost $4,611. My entry point was pretty good I think and I would enter the same trade again based on those conditions. I entered on 4/26 following 2 bullish candles out of the last 3 on increasing volume and oversold levels on the main indicators. There were a couple of good days and I was sitting on a small profit, then it was all downhill from there. I adjusted the trade by rolling down the strikes but eventually I hit my point of max pain and had to walk away from the trade based on my risk management rules. My exit was within a few hours of the eventual bottom and I even said at the time that “while I do feel that a capitulation bottom is imminent, with the market acting incredibly weak, risk management and capital preservation has to now be the focus”. Sure enough, GDX bottomed and has been rallying ever since. At the time, markets were incredibly weak and there was a lot of talk of another flash crash.
This trade did affect me psychologically, but I was able to bounce back after a day or two. I was pretty impressed with my ability to pick the exact bottom (sarcasm), but at the end of the day the risks of holding the position overnight were too high. My delta was getting very high and another big overnight gap down would have been pretty disastrous. While unfortunate, I still feel getting out was the right decision and thankfully I have made back all of the losses so far in June (check back in a few weeks for the June results).
I appreciate you taking the time to stop by and read my articles and results. If you have any questions, please email me at firstname.lastname@example.org.
Here’s to your ultimate success!