I feel so affluent

OPTIONS INVESTORS ARE MORE EDUCATED, AFFLUENT AND STRATEGIC
THAN THOSE NOT USING OPTIONS, NEW OIC-SPONSORED STUDY FINDS

CHICAGO (April 29, 2010) - The Options Industry Council (OIC) today released the results of the latest study conducted by Harris Interactive Inc. and found that not only are investors who use options more educated and affluent than investors who don’t use options, they also tend to be more strategic investors who are more open to new ideas.

The Options Industry Council (OIC) sponsored this study, as well as studies in 1995, 2000 and 2005, to assess interest level, knowledge and usage of options by investors to better direct its options education efforts. The studies are also important for financial advisors, showing them how options investors make attractive clients and prospects.

Each study consistently found that options users consider themselves more knowledgeable investors than investors who do not use options. Furthermore, the studies have shown options users are more likely to have a wider diversity of investments in their portfolios beyond listed stocks compared to non-options users. Finally, the demographic trends throughout the surveys recurrently show people who invest in options are more likely to be college graduates, have higher incomes and a higher value of liquid assets than those who do not use options.

To access all of the Harris Study summaries, visit http://www.optionseducation.org/press/research.jsp.

Monthly Options Education Goals

In addition to posting trading results each month at OPEX, I'm also going to start listing my options education goals for the month but I'll do this with calendar months on the 1st each month. I'll also update my progress for the previous month. So on Saturday I'll post my first goal list for May. I made a preliminary list and its pretty daunting. I've got so many known areas of things I need to learn and undoubtedly new ones will present themselves. In the past I've struggled with trying to do too many things at once at the expense of all of them getting done inefficiently. So I then tried to step back and concentrate on just one thing (life CFA study) and hope to knock things off the list more efficiently, that didn't work either. So hopefully I can find that right mix. I don't have any time restraints so there isn't an excuse. I will continue to make the same type of small trades that I'm comfortable with and see how the learning curve goes on new material and how I incorporate that in to future trades.

My short-term goals are to just continue doing what I'm doing and learn, long-term I would like to find an ideal portfolio strategy that incorporates my style/level of risk appetite, capital levels, and income goals. I would ideally like to find a job so I can let trading profits grow with the eventual goal to have enough capital and trading results to prove to myself that I can comfortably manage my own capital for a living. I have no idea when that might be so it's foolish to put a time frame goal on that. I'll just keep working towards it and I'll know when I'm there.

Frustrating morning/personal update

I pretty much took the day off on Wednesday because I was running errands. I checked in after the close and had another one of those lucky days where the naked puts I sold moved in my direction by 50%, so I got up this morning and was looking to close those out but it was too late. It wasn't a huge deal, it was $180. I had sold naked $17 puts on (BAC) for .38 and they were .19 at the close yesterday. I had done the exact same pay early last week, literally sold for .38 and bought back for .19 and was looking to get back in it again. Well I got that chance but missed getting out a second time. This made me notice something though, I'm currently only putting on positions sizes that don't scare me, nor get me real excited. They aren't big enough to make me want to check in every 20 minutes and they're small enough that if the worse case scenario happens I'm OK with it. I don't know what the right position size is for me right now, I think until I get a grasp on an overall portfolio strategy with position size limits that there is no right position size for me yet.

So here is my personal update. I took a few days off from CFA studying because I was burned out and found myself just sitting there and not really learning much. The pace got so slow that it made sense to step back for a while. I was hoping it would rejuvenate me as that's worked in the past. But the truth is I've been fighting this since day one. I've never hit my weekly target for hours and that just meant I had to speed up the pace as we get closer if I'm to have any chance. I thought it made sense to try and knock this out from Jan-June but Level I took me the better part of 14 months to properly prepare, I don't know that 5 months for Level II was ever a reality. I would rather prepare on my own time frame and then take the test when I'm ready. If that means I have to wait 10 months after I'm ready then it's disappointing but so be it. I found myself not happy in general and just got tired of it. I also had to admit to myself that part of studying full time and then waiting for the results to come out in August was really just an attempt at justifying not looking for a job.

So as of today here is my current plan. I'm starting the options mentoring next week and that last nine weeks. I'm looking forward to finally being able to put in some serious hours on something that makes me happy and brings in money. I also believe it's something I will be a part of for a very long time in the future, so this just makes sense to me. I still very much want to complete the CFA program so I will still study each day, just not 4-5 hours per day. The mentoring last until the end of June and I might be done with CFA by then as well. So the rough plan is to just study both a few hours each day, in addition I will be doing job research. I'll just kind of diligently put in hours each day towards those three things and play it by ear. I also already starting making sure I exercise an hour a day, I started that a week ago. Between taking some time off, exercising, and putting in some time on something I'm passionate about, the quality of my life really got dramatically better these last few days. I'm truly happy right now. I know we've talked in the past about finding that right balance, as of today I've got a better grip on that than the last few months.

Watchlist

I have spent most of the week just watching the market and going through my long watch list of stocks. Throughout the week have been able to take my long watch list with about 50 names and narrow it down to about 16 names which I am interested in. I will be looking at these select few of stocks this weekend in more detail and put some trade ideas together. Below is a copy of my 2nd pass watch list:

I will post any ideas that I come up this weekend.

Iron Condor in SPY

So I am getting past my mental block when it comes to size. I am going to play with the iron condor a little more but with very small size when it comes to risk and contracts. Which will in turn lead to a low reward. But I want to get more experience with this type of trade and the only way I am going to do that is by trading it. So I am going to use the SPY for such a trade. I am going to sell the 123/124/115/114 Iron Condor for a $0.35 credit, leaving my risk at $0.65.

In the chart above I have highlighted in grey the area of profitablility for this trade. It is bascially profitable betwee 114.7-123.37. I think we have hit an intermediate top at 122.12 which kind of pisses me off as I got stopped out by $0.30 from my puts that I bought the other day which would now be in a profit of about $450. But that is niether here nor there, my timing was wrong. I also think that the January highs will be a very important level if we go down that far at around 115.

Here is the Risk Profile from TOS:

So lets see how this plays out. I think this is a good trade but also a mental accomplishment.

New Energy Investment in XLE

I have been wanting to get involved with the XLE ETF for sometime now. But felt that my trading account would not give me enough time for the position to work out. So today I did a buy write at the $62 strike with May '10 expiration for $60.54 with the ETF currently trading at 61.66. Not sure why I did not just sell the $62 put, for some reason I wanted to actually own something. I think it is very likely that I get called out by May expiration which I am fine with and would look to initiate a new position in the same name. But if I do get called out by May it would be about a % gain for 24 days.

If you look at the weekly chart I posted above 61 seems to be an important level on the weekly as it was resistance for several months.

With this trade I am maxed out of my available $10k in the investment account either until I add more funds or if by May expiration I am called out of this position or the puts I have sold on NLY and ANH expire worthless. We will see in 24 days.

2 Seperate Accounts

Ok. So I now have two seperate accounts in IB. One is for my investments and one is for my trades. I will continue to track it all on the same sheet. But I will add something that distingueshes them, not exactly how I will present it yet but I will keep you all posted.

With that said a while back I had sold some puts in ANH and NLY in an attempt to get long the stock. In my investment account I have sold 5 May '10 7.50 puts @ $0.60 putting my basis at 6.90 with the stock currently trading at 7.12 and earnings coming up this week. I also sold 2 May '10 17 puts @ 0.28 on NLY putting my basis at 16.72 with the current stock price at 17. They also report this week.

Let me also note that my trading account has $6k of capital and the investment account has $10k. In the investment side I will mostly just sell puts and write covered calls and look to collect dividends.