Jul 30 Options Writing Trades Update

The Nikkei average rose 1.6 percent on Wednesday, this after Wall Street rallied on Tuesday, lifted by a drop in oil prices, several better-than-expected quarterly earnings reports, an increase in consumer confidence, and speculation that the latest capital raise from a major financial firm is a sign that the worst is over.

Jul 29 Options Writing Trades Update

The Nikkei average fell 1.5 percent on Tuesday, led lower by financial shares after concerns about more credit and housing market turmoil battered their counterparts on Wall Street. I added the N225 Oct 9750 Put Options for 20 pts to the positions.

Jul 28 Options Writing Trades Update

The benchmark Nikkei ended up 19.02 points at 13,353.78, after rising as high as 13,468.94. The Nikkei gave up much of its earlier gains as investors remained cautious before more earnings reports due in both the United States and Japan and a raft of important economic data including the U.S. payrolls report. On days like this when the market is directionless, you can find that both the premiums on the calls & put options can decay concurrently...which works for options writing.

Options Writing Risk Management

1) Risk management begins not after you enter your positions but before you enter any positions
- Sell far out of the money options. Our objective is not to pick the winners but to avoid the loser. This fundamental difference in thinking is key to a successful trading "career" for the long haul.

2) Plan the trade & trade the plan
Set your mental stop loss limit at (example: 2X or 3X the premium value sold for) & execute it when reached. Period. This value is not fixed & can be adjusted depending on the individual market. This is speaking from experience. I have the battle wounds to show for. Instead of taking a small loss, I have had months of earnings wiped out for waiting too long to cut loss on not 1 but 2 occasions in 2006(N225) & 2007(ER2)....I am a slow learner.

3) Do a credit spread instead of naked options writing
For the more conservative trader, use certain percentage of your proceeds from the short option sales to buy a closer to the money option to offset the far out-of-the money short options which can partially offset your loses if the market goes against you.

The Week Ahead

The coming week is packed with earnings reports and several highly influential pieces of economic data, including the advance second quarter GDP report and the July employment report.

Jul 25 Options Writing Trades Update

Japan's Nikkei stock average slid 2.0 percent on Friday after Wall Street lost ground on poor housing data snaps rally on stocks. I picked up some N225 Oct 9750 Puts for 20 pts.

Jul 24 Options Writing Trades Update

The benchmark Nikkei average added 290.38 points to end at 13,603.31, above its 25-day moving average and its highest finish since June 26. The N225 Oct 15500 Call Options was last done at 40 pts & went as high as 50 pts. This is close to my stop loss point. I will have to make a few adjustments to the positions when it hits the trigger.

Jul 23 Options Writing Trades Update

The benchmark Nikkei ended up 127.97 points at 13,312.93 after rising as high as 13,388.63 at one point. I picked up additional N225 Oct 15500 Call options for 35 pts.

Jul 22 Options Writing Trades Update

Wall Street posted a slight loss near the unchanged mark on Monday. The Nikkei on the other hand climbed a whopping 3% percent on Tuesday, with Banking stocks up after a string of U.S. bank results that beat forecasts, providing some reassurance to the market. I got filled on additional N225 Oct 9500 Put options for 30 pts & the Oct 15500 Call Options for 25-30 pts.

Trading Income Meter

Today, a friend ask me if I am trading full time. I am not at the moment. I am still gainfully employed & enjoying every moment of it because I learn new things everyday by interacting with people. However, this got me to take stock of where I am now in terms of my trading income Vs my employment income. My monthly trading income now averages 60% of my employment income & the next intermediate goal is to achieve 100%. When I reach that stage, it will bring me another step closer to my financial objectives & I will have more options in terms of what I want to do. Author of the best selling book "Secrets of the Millionaire Mind", T Harv Eker said "Your income is directly proportional to the extend of your comfort zone". The bigger it is, the more wealth you can handle. I am building up my comfort zone to handle more. When you can handle more, life gives you more.