December Thoughts

 -Alerts must be set on SPYders and indices. I need to know when they are breaking out or failing. 

-Internals are huge cues for overall market and can place great trades when it is clear. 

-Expand on my big picture setups    

    -Majority of my trades are out of tight ranges and consolidation.

    -Some reversals

    -Some breakouts

    -Some Failed breakouts, taken back into range. 

-Created Sector Ranking

    -Point system. 

        -% Performance. From Daily changes, to weekly changes to monthly changes. 

        -SPYder rank

        -Consistent Trend. Continual high % Green for weeks straight.

        -Relative strength from Prev Day

        -RS from Ratio with SPY and QQQ

        -Sector Stock Rank

    -This way I can open my sheet, and right away it tells me what the best and worst performing sectors are. 

    -This is important because I need to only trade the strongest and weakest sectors. It does not provide a big enough edge to trade sectors that are not performing the best. 

-Create calendar with important events on it

    -ForexFactory

    -FANG earnings

    -Dont get caught with pants down

-Create avg of 20d to see where extremes are, same with 10 and W and M


-I am really wanting to sell options. I keep thinking about it and how it would benefit the way I want to trade. Instead of trading options or stock, I am selling ideas. Im selling time. I want to trade the edges. I want to make the bet that you are wrong. And that alone is what gives me profit. No longer would I have to judge if I am right and also how much. It is 'I believe TSLA wont expire above 175. 

    -Obviously theres tons more to it. Butterflys, Condors etc. Hedging overnight risk. Daily setup. The main point I think I have edge in, Is failures. Failed breakouts in a weak sector, theres high probability it is not going to reach a certain strike price on expiration. That is what I want to capitalize on. 

    -Ive been hurt so many times from time. Time is not on my side when I am an option buyer. Pullbacks hurt, time hurt, market risk hurts. Everything is so against you when you buy. But when you sell. Time is your friend. I can take the same trades the same ideas, just executed in a different, more consistent manner. 

    -If Semi is my strongest ranked sector, I see a range built out semi stock on the verge of breaking down. That is where I want to be 1) Buying the failed breakdown with calls, or 2) selling puts. What are the chances that one of the strongest stocks, in the strongest sector, with strong market breadth, is going to breakdown and close underneath a level THAT also has the higher OI, meaning option MM sellers are heavily involved in the sale of the option. They hedge. They have the BP to ensure that stock doesnt breakdown or close under that strike price. 

        -I can express my trade idea as simple as 'it wont close under here on exp date. or

        -'I can buy this dip, and expect it to return back into the rang, and if market sentiment continues to be favorable, can hold and add as it continues working and I can scale in and out as needed.

        -One is much more complex, where the other is much more simple. It is still the same trading idea though, just expressed through different products. 

    -I can ABSOLUTELY, still buy options. Under certain conditions in high probability setups. I can still sell options and buy them at the same time. And when my idea works, exit the hedge. If it doesnt work, by the time I find out it doesnt work, my hedge will actually net me a small profit due to the passage of time. 

    -When stars align and market is clean and clear, that is when I can buy and be more aggressive. When times are choppy and range bound, that is the best time to sell and play defensive. When there is a mix, my trades can also be a mix of both bought and sold options. 

    -Another point to note is I know exactly what my max profit can be. When combining other hedges and straddles etc in, I also know what my max loss can be. And these are trades to hold as long as I can until my idea plays out. It is not 1 dimensional. Time adds the other dimension. I dont have to worry about slippage, or spread, or theta decay hurting me, rather I can have defined risk and profit targets set. 

-For a very long time I was turned off by the idea of learning calls, spreads, condors etc. And I still dont quite see the benefit for me, but as I am able to start doing this, it may come upon me that they can be beneficial for my trades. But for the most part, I am just interested in selling calls and puts on my list of stocks. Mainly looking to short failed breakouts or over extensions. Fading the edge of ranges.  

    -Another point to note, (these come to me day after day), is that while im at work there is a certain amount of anxiety I have when I am long puts or calls, I feel the need to be more involved in managing those trades. Any pullbacks mean I am losing more money than I want. I dont like the set it and forget it attitude, because a lot can change in between that. And my rules dictate I am execution decisions based on environment. With selling options. It REALLY is a set it and forget it. Stop is set and the end. Let time work in my favor and adjust when I want to, not when I have to. Pullbacks mean less p/l loss because of time working with me. 

    -With pullbacks buying options, I lose p/l and have to adjust to conditions. With selling, I lose less p/l and have more time to adjust and make decisions. 

    -I could sit here and make a big pros and cons list, but I have spelled out enough I think. I think about selling options everyday now. 

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