November 2009 results:

November turned out to be the most profitable month to date. I attribute this to the late October spike in the VXN which enabled me to sell the Dec 1250 put for a nice premium. Soon after, however, the VXN retreated back to its recent lows and remains stuck at the lower end of its trading range. This limits the premium I can sell puts 20% otm for. I would consider selling puts 15% otm, but with the year wrapping up I am becoming leary of what turn the market may take. I am especially worried about the weakness in the USD and when it may reverse, since the market seems to be rising as the dollar weakens. I think this may mean once we see USD strength, the market may turn lower, becoming uncomfortably close to 15% otm sold puts. However, should the market turn lower in the next few days, I would still look to sell puts 20% otm and possibly some Jan 2010 puts that I would close out when the market rose again. At this point, the premiums available for Dec options aren't high enough to risk selling further options and I would rather close the year with an additional $500 or so from the Dec puts I have already sold.

October 2009 results:

October was the 2nd best month so far, due mainly to the fact that I was able to sell a November 1300 put early in October when the NDX was in a decline and the VXN rose by 10% to the 30 level. The net on that sale was $387.50 on 13,000 margin. $366.00 was made on 41,000 margin, which again shows that with the VXN deflating month to month, it is getting harder to sell premium at least 20% otm and receive a decent premium. Todays 7% increase in the VXN is encouraging, especially considering the market is still climbing higher. Hopefully the market will enter into another 5% pullback, allowing for more Nov puts to be sold.

September 2009 Results:

September ended with another gain even as volatility levels continued to decline. All options were closed out for .05. I wanted to place more trades, but the fear of a suddenly reversing market kept me from doing so. I still believe the market is approaching a critical level where a pullback of 10% or so will occur, especially as the NDX is approaching a multi year congestion area around the 1750 level. The VXN is still bouncing around its mean levels since July, either to go higher or drop back down into pre Lehman channel of 22 to 35. However, any pullback will come with elevated VXN levels as traders look to lock in their profits from the last 6 months. As we approach last Septembers market levels, we should consider if things are really any better than they were before the financial collapse last year.

August 2009 Results:

I was only able to place 2 trades for Aug expiry and also had to deal with exceptionally low premiums due to the falling VXN. This months profit was just $312.50 - the second smallest since February. I have been calling for a pause in the market for some time now, and yesterdays pullback seems like it will be less than hoped for. The only way to overcome such low premiums is either to sell more contracts 20% otm with about 30 days to expiry, or to sell contracts about 6 weeks out, for a higher premium. However, I am glad to see I have had only 1 small loss since February and as long as the NDX / MNX continue to climb and avoid another black swan event, it is likely that this strategy will contribute about $6,000.00 to my pnl for the year.

July 2009 Results:

I am pleased with the July results as I managed to bring in the largest premium amount so far. I contribute this to the fact that 4 trades were placed instead of the usual 2 or 3 and to the large premium received from the 1200 strike put which brought in $322.50. The timing of this trade was particularly good as I managed to place the trade just as the VXN level increased, capturing the increased premium, and closed the trade 9 days later once 75% of the max profit was achieved. I chose to close the trade at this point because the strike was the closest to the money, and remembering that this trading strategy is "low risk", closed the trade once 75% max return was achieved, thereby locking in the quick profit and removing the trades risk.

As I stated in my previous post, earnings season is underway and I expect a rise in the volatility level, increasing the put premiums for August. It seems the market in general is beginning to accept that the economic recovery is further off than the "green shoots" predicted. Hopefully the earnings reports back this up, and the market turns down. I had spoken about selling the Aug 1125 put for about 4.40, but with today's decrease in volatility it now trades for only about 1.90. It is still comfortably 22% otm, so tomorrow I may try to sell it for 2.00 on any uptick in volatility.

June 2009 Results:

I was satisfied with the June contracts which I closed out early rather than let them expire. I chose to close them early since 2 of the 3 could be closed for .05. I would rather close the trade for .05 than run the risk, however unlikely, that some event would bring the market sharply down on the Thursday night prior to expiry and leave me unable to adjust the trade since expiry was on Friday morning market open. This would be the worst case scenario and closing the trade prior to expiry eliminates this risk. I also chose to close out the 1550 call because the market hadn't taken the turn down that I had been anticipating. I didn't want to risk having the trade turn into a large money looser, wiping out a good portion of my gains year to date - I have had that happen in the past when I traded bear call and put spreads (another reason I now trade naked index options). Going forward I will provide the monthly returns in spreadsheet format and hopefully soon will have past periods added as well.

May 2009 Results:

April 2009 Results:

March 2009 Results:

February 2009 Results: