My New Year's Goal for 2007

This is me favorite time of the year. I like to spend time reviewing my past year accomplishments and the one I am most proud of is my 50% annual return on 44 of 48 credit spread trades. This was a 91.7% winning trade performance and my best ever. 100% would have been better but during October and November the SPX Index would not stop rising and I had to close 4 Bear Call Spread trades. I learned from this experience and I am now a more conservative trader and look for safer trades like the ones traded this month that should be expiring on January 20th. One of the January Bear Call Spread trades filled in mid December is 194 points away from the current Index price. This trade is more than safe and their is only 18 days remaining to expiration.

My goal for 2007 and to improve on this years performance and trade the safest of trades and when I have to make an adjustment I will do it early enough so that we can break-even on the trade.

Update on January Trades Expiring in 18 Days.

All Bull Put and Bear Call Spread trades are very safe and should expire worthless on January 20th. The short legs of the SPX, NDX and RUT open spread trades still remain 93, 106 / 194 and 67 points away. These are very safe distances. We have one Iron Condor NDX trade completed so far this month. The return on this NDX IC trade is 5.3% which is my goal. I am continuing to research safe Bear Call trades on the SPX and RUT Indexes this coming week. My goal is still to complete Iron Condor trades on the SPX and RUT indexes over the next 2 weeks.

All Speard Trades Expired Worthless on December 15th 2006

All Bull Put and Bear Call Spread trades expired worthless on Friday December 15th. Bull Put Spreads trades on the 3 Indexes were traded first followed by 2 Bear Call Spread trades on the NDX Index. Bear Call Spreads on the SPX and RUT Indexes were to risky this month for this strategy.

The total return this month was 2.9%($115/$3.905). All credit premiums collected totaled $115 (20+25+30+20+20) and $3,905 (980+975+970+980) margin was required per contract. Those who traded 10 contracts per spread collected credits totaling $1,115, those trading 20 contracts $2,230. These are the returns and cash flows I expect to receive consistently each and every month. The return will be higher in months when Iron Condors can be completed on each Index. In December we had one Iron Condor completed on the NDX Index.


Click to view details of these December trades that Expired worthless.

Update on December Trades Expiring Next Week

All Bull Put and Bear Call Spread trades are very safe and should expire worthless in 6 days on December 15th. The short legs of all the open spread trades are an average of 96 points away from the closing prices of the 3 Indexes. Having this much distance with one week remaining is the fun part of this trading strategy. All we do now is relax and wait for the options to expire. Subscribers who filled one of the 2 NDX Bear Call spreads last week will realize a 5.1% return on this NDX Iron Condor.

I am now researching safe Bull Put Spreads trades expiring in January and will be emailing these new trades this weekend or early next week.

Click to view details of these December trades.

Update on Open Trades Expiring in 14 Days (Dec 15)

With just 14 days remaining until expiration the Indexes are hovering up and down. All Bull Put Spreads filled in November are destined to expire worthless. The SPX, NDX and RUT Bull Put spreads have short legs that are very FOTM and not at risk. Even the NDX Bear Call Spreads are safe with the short legs over 100 points away. I really like it when all my spreads are FOTM with 2 weeks remaining.

My goal is to enter new spread trades with 40-30 days remaining to expiration that are very FOTM. I really like it when my short leg on a spread trade is between 2 and 3 standard deviations from the projected index price at expiration. I will be researching new trades for January expiration this week and hopefully will have one or two new spread trades with short legs 100 points away from the current index prices.

I have encouraged all new subscribers this week to practice entering all my trades using CBOE's new Virtual Trading system. This is a great free system that is very easy to use. I enrolled myself to practice selling puts and calls on the same stock each month.

New Trade Alerts-Timing and Processing of Orders

All my Trade Alerts are created and emailed after trading hours during the week and on the weekends when the markets are closed. I am placing my GTC limit order for each Trade Alert at the same time each email is sent. Almost always my limit credit amount is the current bid price for the spread. Subscribers can process these Trade Alerts just like me as long as their limit order is posted by 9:30 AM EST the following day. When our orders are filled a stop loss order can be processed. These stop loss are not time sensitive but should be entered as soon as possible.