I started trading again two weeks ago after a brief hiatus to rest my mind. I was trading scared and I had lost my patience so I decided to give it a break. Many of you who follow my blog know I am a very risky trader. I am the kind of person that is not afraid to take incredible risks IF the return is incredible as well. I have no problem taking risk that return 5 to 1 if there is a 25% chance it will be successful. It just takes a stomach of steel, patience, timing, the ability to know when to let things run and when to set a tight stop, and some luck . Last year I just didn’t have it. Two years ago I was on fire. This year, things were flatlined with a slow drip. That is until this week.
ICE, LFC, and ENER(short) were nothing short of perfect for me. I returned 100% this week and picked up a nice 12.5K. Yes, they could have gone the other way but they didn’t. I am out of everything but ICE and those I rolled half of my investment into the June 150’s. I couldn’t have played ICE much better and half of it was luck. At times it looked like I had left a lot of money on the table, other times I looked like a genius, but in the end it was somewhere in the middle.
With LFC, I had heard from a friend they were going to be added to the Hang-Seng and wanted to ride the stock up and sell when it actually happened. I bought the Feb 45’s rode them up and then the news came today. The stock popped and I sold (not at the peak but while it was positive). It dropped hard throughout the day leaving me feel like I knew what I was doing.
As for ENER. I had a calendar spread on for the past two weeks. I had sold the Feb 30 calls and bought the Junes. I decided to sell the Junes earlier in the week and just sell the calls. I realized it was a bit risky but I felt the downside was much heavier than the long side, short term. I like the stock but on a very long term basis and June just wasn’t long term enough. I don’t think they will turn a profit until next year. I’ll be a buyer after a bit more research on sales. Anyway, the stock tumbled today and I bought back the calls for a few dollars, putting some extra spending money in my pocket.
After this week. I’ll be taking out a few grand to buy a new Imac ( My Dad and I already have 16 of them between us and the business but I haven’t gotten the newest model yet) and I’ve been scouring IBD for some new volatile stocks. One more good trade and I will pick up the Sony Pro camera I’ve had my eye on to start doing videos (humor and gardening) P. Allen Smith has nothing on me.
Contrary to Trader Mike, I love expirations week. The premium is sucked out of the options and it comes down to straight movement. Some call it gambling, I call it super concentrated trading. I can turn 1K into 10 K quickly. I can lose it even quicker but I love limited risk, unlimited gain. When things get bad like they did last year, I tell myself it would be better to trade stocks. I buy and hold stocks in a seperate account but I never trade them, I just buy them and leave them. That account returns 15-40% annually for the past 6 years. My options trading, on the other hand, has been all over the place the 4 years I’ve traded. The returns have been 300%, 10,000 %, – 100%, for a net gain of 160K. This year I’ve already started off up 72% for the year. Many didn’t believe my stories about my returns so I entered a stock picking contest on the Investor Village boards. I returned 29% last year on that with just stocks . In 1991 I won the USA today stock picking contest at the University of Alabama. I’m saying all this because I had a good week and I feel confident. A couple bad trades and you’ll get the “I can’t trade my way out a paper bag” story. Save me some research if you can. If anyone has some good stocks for this coming week please email or comment.