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My Definition of Well-Traveled

well trav·eled – adjective – a person who has (1) vacationed in over 100 of the Travelers’ Century Club ”countries” and has, (2) on several occasions, been (3) traveling alone and (4) been the only one on the overnight bus / mini-van who was “reasonably” fluent in English and not able to hold a conversation in any of the local languages.

Feeling Good

Feelin’ good, feelin’ good
All the money in the world spent on feelin’ good

The above are a part of the chorus of the song Fool for a Cigarette/Feelin’ Good which was written by Sidney Bailey, a Memphis cab driver/songwriter and performed by Ry Cooder. I’m a fan of Cooder’s music. I first heard the song in 1974. When I first heard it I related to it right away. The song really is all about the phrase above. All the money in the world really is spent on feeling good. For years I’ve racked my brain trying to figure out what people spend money on other than something which makes them feel good and I haven’t had a lot of sucess coming up with alternatives. [MORE]




Reading List to Absorption

I like reading lists. Especially reading lists from creative, thoughtful people. Especially successful,  creative, thoughtful people. I was looking at a recent post from Matt Mullenweg. I started going down the list and seeing if any of the the books made sense for me. I ran across one title, Extreme Ownership by Jocko Willink and Leif Babin, that might be for me. I looked in my local library online catalog and noticed that there were 45 people waiting on 6 copies. A light went off. Maybe I should read this book. I checked Audible. Yep, they had it and I have credits. However, I use my credits sparingly. I only get two a month. I now go to Amazon to see if they have a summary of the book on Kindle Unlimited. They did. Three of them. So Kindle Unlimited it will be.

There are actually several takeaways from the above segment of this post. I list them because that’s really what this post is all about.

  • Reading lists are good. They help me find books that I might like. They’re like a filter. They give you more choices and save you time. If you find reading lists from other people that seem to make sense for you consult them periodically like you would the more popular lists such as the NY Times Bestsellers list.
  • You need a variety of resources. I went to my public library first. It’s free. That’s always my first choice. When I saw overwhelming demand, I then went to Audible to see if they carry the book. It’s almost certain they would. Audible tends to be my last choice as I only get two books a month. Not all great reads come in audio format. A high percentage do, however. I went to Amazon to see if they had the summary in Kindle Unlimited as the above book is more of an educational as opposed to a purely entertainment choice. Summaries are great and Kindle Unlimited makes them a very, very viable choice for me.
  • You do not have to pay a lot of money for books every month. My Audible and Kindle Unlimited subscriptions set me back about $33 a month, but I get the ability to consume an enormous amount of material when you combine that with my public library access. Hoopla and Overdrive are Godsends.
  • Summaries work. The concept works for some books better than others but, essentially, it works for all books. Think Cliff’s Notes. Sometimes I check out the summaries before I actually get the book to see if I really want to invest the time into the material. Sometimes I get the summary after I listen to the book to see if the book was as good as I thought it was.

Hoopla Basics

Hoopla gave me a lot of trouble in the beginning. The primary reason was that I had originally thought that I could download books off of Hoopla. I tried and tried. Well, I tried a few times. I even talked to my local librarian about it. No luck. Eventually, primarily because of the fact that Hoopla kept turning up all the time, I came to realize that the way to download Hoopla books was to download them on my cell phone. It was really easy. Perseverance – I love that word. Hope is the reason to keep trying. My next step for Hoopla is to use it more often. The books loan for 21 days and I can borrow as many as 6 at a time. Very nice. My next move is to read (listen to) some books that fall under the category of “Market Economics” or one of its may cousin terms.

SMA 50 Period Crossover Trading Plan

This is a post designed to help me prepare and codify rules for trading the SMA 50 period crossover. There are YouTube videos that discuss the Simple Moving Average (SMA) located here (*), here (*), here, here (*), herehere, herehere, here and here. Note that this strategy uses only the 50 period moving average for the trade.

ENTRY POINT: The entry is done when the stock moves above the 50 SMA.


FINANCIAL INSTRUMENT: Any type of financial instrument can be used – stocks, options, ETFs, etc. I will be using options. This is a long only strategy so I will be buying Calls around the Option Strike Price that is closest to an Option Delta of .70.

HEDGING MANAGEMENT: I will be using a Roll Down Strategy to keep the Option Delta around .70. I will also be using Puts to hedge my Call purchases. This will be covered in Rules.

MONEY MANAGEMENT: One Call will be purchased on entry. At the time of this writing only a Call on SPX that around .7 Delta and was approximately one week until expiration would violate a rule that states that no trade would be more than $1,000, i.e., one percent of a $100,000 portfolio. The purchase of one option contract of a typically priced stock would rarely be more than one percent of a reasonably good sized portfolio. Over 99.9% of stocks with weekly options and a price under $100 and have options with a .70 Delta and a seven day expiration are priced under $2.50 or $250 for a contract. This represents about one percent of a portfolio that meets the requirements of a day trader ($25,000). Additional Calls will be purchased if the stock moves approximately one Average True Range (ATR14 – 14 periods) into the profit zone. Subsequent Calls will be purchased at the .70 Delta for every ATR move into the Profit Zone. At this time there is no limit planned for trades that wind up being a significant portion of the portfolio due to their profitability. This may change as the strategy is implemented.

RULES: Please see trade notes below for more details on the statistics of of this trade. (1) Enter when the stock moves above the 50 Day SMA. This gets a little tricky. Scenarios: (a) Stock opens below the 50 Day SMA and then steadily rises above the 50 Day SMA and closes over the moving average. No trade management needed. (b) Stock gaps above 50 SMA. Buy at the open, if the stock starts moving backward buy a Put hedge or sell the Call.  (c) Stock opens below the 50 Day SMA and then steadily rises above the 50 Day SMA and then vacillates above and below the 50 Day SMA. You can either bale out or buy a Put and see where the dust settles. If the movement from the open is serious, buying the Put might be a better solution. If there was very little movement to the 50 Day SMA, it might just be wise to bail or to see where the dust settles. A move of ten to twenty percent on a $100 – $250 option contract is hardly going to break the bank.Tomorrow might offer a clear picture of what needs to be done.

TRADE NOTES: It is my perception that the most relevant trades are the most recent or trades that are looked at with specific market conditions. I think that trades made in the past year are more relevant than trades made in 1950. I think that trades made only in markets going up are not as relevant to trades that are loosing money as trades made in down markets. No matter what, you cannot predict the future with certainty, but you are foolish not to at least assess the probability of an event happening. For approximately 30 years I wrote code for a living. For five of those years I wrote simulations and did statistical analysis for a university with an enrollment of over 30,000 students. For 20 years I was an accounting systems freelance programmer responsible to make sure income statements, balance sheets and cash flow statements were correct. I also made customizations to customer’s software, primarily in the Inventory, Sales Orders, Account Receivable, Payroll and Materials Requirements Planning modules. For five years I wrote software to help me manage my personal portfolio during a period in which I lived strictly off of my investments. One day I realized that entries and exits are important, but the real strength of any trader is in the Management of the Trade. That’s really the reason for this discussion.

Simulations: Sim1: In this simulation I took a look at approximately one year of trades (249) from March 12, 2018 to March 8, 2019. The simulation included 532 stocks that have weekly options. The stock was bought when closed above the 50 Day SMA after it crossed above the 50 Day SMA and had closed below the 50 Day SMA the day before. The trade was closed when the stock closed above the 50 Day SMA on the previous day and it closed below the 50 Day SMA.on the day of the trade close. It should be noted that the close  values might well be the simplest values to use in determining profit for each trade. The were originally used in the simulations but the results were but the profit resulting from using the closes was so poor as to profit potential to render them not worth the time not the profit. However, when the close was substituted with opening above the 50 SMA  and the crossing of the 50 SMA as the buy and sell points, the trades became worthy of consideration. The problem with using opening and crossing values is that the trades now require some management. In Sim1 there were 3,855 opening trades in the 249 days for an average of 15.48 trades a day to open positions. Note that there will also be about 15.48 closing trades a day on average. That’s a lot (too many?) trades. The trades made a total of 7,860.54 percent in profit over the 249 days for an average of 31.57% for each day of the period or about .05934% per stock per day. The average gain for each stock was 14.78% for the 249 days or about 1.23% per month. This result was with some simple fundamental trade management. Buy at an opening above or a crossing of the 50 Day SMA. Sell at an opening below or a crossing below the 50 Day SMA which results in a closing. Not a lot of management was involved. No hedging needed to be done.


Earnings Plays I

(1) Go to Zacks and get a list of the stocks that are reporting earnings AMC this day and BFO tomorrow.

(2) Use Notepad++ to make a list of stocks for the watchlist. You can also download a CSV file from Zacks to put into a spreadsheet if that works better for you.

(3) Use TEMP (or some other watchlist) as a watchlist in thinkorswim TOS and place the stocks in the watchlist. Then go thru them to see which ones had a 7% or more as the Market Maker Move. You can verify this percentage with https://marketchameleon.com/Calendar/Earnings?d=20191029. Change 20191029 to the correct date. Go through the stocks one at a time trying to find the best deals for an iron condor or an iron butterfly.

(4) Be sure and check the chart.

(5) You can also place the watchlist in a live TOS (not paper) and export it to a spreadsheet where you will have all of the data at your fingertips for a quick decision. However, usually the list will be short enough so that it will take little time to evaluate the list.

Option Alpha Earnings Trades:

Reflections 20181102

Today I needed some space on my MP3 player to download some new books that I got from the library. Now my MP3 player only holds about 8 Gigs total. Only??? Right, I absolutely do have some issues that I need to work out. But… Continue reading

Hillman To Do

I’ve seen most of the Top 100 Hillman Wonders. There’s still a few more I want to see. My travel philosophy is that it’s not about where you’ve been, it’s what you have seen, tasted, touched, heard and smelled. You can shorten the previous sentence to experienced. This post is about the Hillman Wonders I haven’t seen but intend to see. The following is a breakdown of those Wonders. I’m going to work on the list during the next few weeks as I get a moment here and there. Continue reading