The Credit Spread of the Qs and the PUT

Finally the Red Candles came down on us. Excitement of crashing markets? The market pulled back for 3 days on the QQQs. Today after another initial drop it recovered and I closed my PUT since it hit the STOP sign. I closed it for a 10% Profit. We take what we get. Of course it would have been great if the market would have fallen further but hey, who are we to tell the market what to do. It does what it will, all the time. 

Remember we do a Hedge Fund, we dont act like investment banks. They only go long and cannot buy or sell options. We have an advantage and are much more flexible. Remember, since I bought a naked PUT yesterday and was already holding a Credit Call Spread I was bearish. I said this 13 day uptrend cannot go on for ever and must retrace. 

I waited for the market to give me RED CANDLES, please go down a lot. We make money in both direction and even if the market is flat and flatter. Flat like the the Salt Flats in UTAH. We make money. If it doesn't work out immediately it will eventually. 

Our Goal

Our goal at this point in time is to stay consistent profitable. We are in the game to stay, not to win every battle. We will win this war. We do not have any big winning parameters defined. Just a few:

• R >= 1.5. Win Ratio of 1.5. Means for every Dollar we lose we shall make 1.5 Dollars 
• W >= 60%, Winner to Losers to be >= 60%
• Our Kelly Criterion shall be greater than 20. Dont ask, google it.
• Be consistently profitable.

This is our number over a period of 6 months and we are getting there.

• W = 51% winners since I still make avoidable mistakes
• R = 1.43
• Kelly = 17% means only 17% of our total accounts should be in any given trade. We run it at 23% though.

We are more on the strategy of a Guerilla. We attack where we are familiar in the environment and with the means that work and take home what we can carry. We will move into other areas. We are here to stay. We are not here to win every battle because you cannot. We are not here to cash in a certain amounts per battle /trade. This would be an finite game. A finite game has strict goals. I.E. Make a certain amount of money every week. We dont.

• Environment we battle: Mostly liquid ETF (QQQ, SPY) and Blue Chips Stocks (AAPL, MSFT, etc)
• Means: Call and Put Credit Spreads, Iron Condor, sometimes naked Puts or Calls. Very few stocks, only Acceleware
• Other Areas of advancement: Earning Reports
• We take what we can carry: 25-30% P/L on each trade.

The Bear Call Call Spread

The Call Spread hit target gain of 34% and was taken off. The initial down move this morning pushed us through the target. 34%!!! Happy day.

The Standing: 

• AAPL is almost there for harvest, 23%
• IWM needs to grow a little more, 11.5%
• SPY waiting for the trigger, 29.94%

SPY is to be taken off tomorrow regardless of profit as long as there is one.

The Trigger Rule is 

• 14 days on or
• 30% P/L.
• If negative keep it until positive or
• Roll it if DELTA >= 30
• Book a loss if it hits Strike Price