Fund D Update - after expiry Friday 16-Jan

Both vertical spreads for MS & COF and one BAC naked PUT (with Stop-Loss protection) all expired worhtless. Kept profit of $4,008, $2,222 and $350.

Total profit for the Jan Option month is $13K, exceeded the fund objective of between $5 to $10k per month. Key profits for the month :-
MS = $4,008
C = $2,240 + $130
BAC = $4,136 + $350
COF = $$2,222

Could have been a bit higher if we did not close out C-PUT-Jan position yesterday as we do not want to keep open positions during earning announcement due to unpredictable market response.

Market very volatile due to Option Expiry Friday. Saw some good opportunities and setup some new positions for Feb.

Old Net Value = $92,062 (as of 6-Jan)
Current Net Value =$106,701 (as of end 16-Jan)
Current Cash Value = $110,854

January option month contributed a value of about $14K from base of $92K i.e. about 15.2% for this month (or in 10 days). Average time spent per day in Jan was high at about 45 minutes (a typical month average was 20 to 30 minutes e.g. for last quarter).

Fund D Update - before expiry Friday 16-Jan

Just about to went to bed last night and heard from CNBC news that Citi brought forward their earning announcement from 22-Jan to 16-Jan (before market open) i.e. on option Expiry FRIDAY !! That sucks...... what a timing.
As we do not trade through earning period, quickly close (BTO) all Jan-C-PUT positions. Collected $130 profit instead of $1,040 planned. And can sleep well not having to worry about Citi earning announcement next day (was prepared to take small losses and get out if needed).

Fund D Update

MS and COF still on downward trend. No action needed. Likely to achieved max potential profit of $4,008 and $2,222 respectively by expiry Friday 16-Jan (positions started on 5-Jan through STO).

All major banking stocks on downward trend today due to news on C and BAC. Implied Volatility of C and BAC went above 200%. Couldn't resist to try to collect $1K or $2K with high probability of winning e.g. selling far out PUT option for Jan expiry Friday which is only 1 day away.

STO (Sell-To-Open) 130x Jan-$2.5-PUT-C at $0.08. C price was at $3.90. To lose money C has to drop from $3.90 to $2.42 which means it must drop 37.9% within next 1 day. Target profit of $1,040 within a day.

STO 20x Jan-$5-PUT-BAC at $0.175. BAC price was at $8.00. To lose money BAC has to drop from $8 to $4.83 i.e. it must drop 39.6% within a day. Target profit of $350 within a day.

Fund D Update

Bear-CALL-Spread Positions Management
C share price dropped to $5.01 and profit of the Bear-CALL-spread hits target 80% of max potential profit. Contract is 20-Feb and has 35 more days to go, not worth to wait that long for another 20%. And C is announcing earnings on 22-Jan and we do not want hold open position through earning announcement due to unpredictable outcome. So BTC (Buy-To-Close) all 100 C contracts at $0.055 and returned $550 back to the market and keep profit of $2,240.

COF share price dropped to around $26. Profit is more than 80% of max potential profit. Price is $9 (34.6%) away from defense line of $35 and 2 more days to expiry as this is 15-Jan contract. Likely to keep 100% of max potential profit of $2,222. No action needed.

MS price dropped to $17.25 and retracing back upwards. Very volatile and this is our highest risk position. Potentially may lose money if held for 2 more days as price is only $1.75 (10.1%) away from our defense line of $19.00. Profit crossed $2,000 today at 50% of max potential profit. Should have closed it out and locked in $2K profit but was hesitant.
Today MS dropped and pierce through its $18 support level. So it is likely that $18 will become its new resistant level which mean it will likely stays below $18 and we may collect full 100% profit at expiry Friday. Max potential loss is about $8,000. Potential max profit is $4,000.
Summary sheet.

Fund A CLOSED - target met

Fund A Closed. Target met. Net value increaed from $50,000 (1-Sep-08) to $100,470 (9-Jan-09) in about 4 months (target was 12 months). Congrates.

Kept 20% commission (i.e. $10K) on the $50K profit made. Returned $90K to investors. All investors requested to continue to stay invested. So will open a new Fund D with an initial investment of $100,000 (starting 10-Jan-09).

This is an Absolute Target Fund which has very specific target by Profit Amount and/or Time. This fund will be closed once the targeted Profit or Time has been reached.
Targeted fund to close within 12 months or upon achieving 100% profit whichever occur first.

Fund A Status after closing for Fri 9-Jan-09

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Banking and credit card issuer Stocks price came down nicely as projected over the past 5 days. BAC met target of 80% of max profit potential.
So went ahead and closed it. Collected profit $4,136 within 5 days (upfront premium value collected $5,136. closed position & returned $1,000 back to the market), not too bad.
If held for another 5 trading days until Expiry Friday 16-Jan-09, can keep this $1,000 as well. Probability is still very high, but decided to close out and can have a good night sleep).

As of 5-Jan when BAC position was opened, the potential max risk vs reward is 2.89x (i.e. $14,864 potential lost assumed held till expiry at max loss vs $5,136 potential profit).

As of 9-Jan, the profit on-hand was already $4,136 and the additional potential profit to make was $1,000. The risk vs reward is 4.14x (i.e. losing the $4,136 already in the money vs additional reward of $1,000).

In worst case scenario, if unfortunately "gapping" occurs over the next 5 days before Expiry Friday (though it is very very unlikely), the max potential lost will be this "profit on-hand" of $4,136 and $14,864, a potential "lost" of $18,990 vs additional potential profit of $1,000 only. This risk vs reward is 19.00x !

Very high probability of keeping this additional $1,000 profit because current BAC share price is at $13.19, i.e. about $1.81 (13.7%) away from our nearest Strike Price of $15.00. This is a judgement call that we as the Traders has to decide. Our decision is to close the position, keep the profit and have a Good Friday night sleep. Cheers......

GREED vs FEAR ....... always.

Fund A Status for Monday 5-Jan-09

Have not been trading for sometime.
The market has been on the up trend in the first few days of the new year 2009. Believe that the market will be range bound or slightly on the downside over the next few weeks. Some of the financial stocks and credit card issuers still having relatively high implied volatility. So decided to setup vertical spread (Bear CALL spread) on some of those stocks. If my decision is wrong and these stocks price continue to go upward, will need to cut lost at break-even point or with some loses.

Choosing spreads where the potential gain vs potential lost is at a ratio of 1:5 (or 1:4) minimum. E.g. for BAC the amount collected from selling the vertical spread is $0.30. The distance between the strike prices BAC-CALL-Jan-15 and BAC-CALL-Jan-16 is $1.00. Max potential profit is the $0.30 premium collected upfront. Max potential lost is $0.70 (i.e. $1.00 minus $0.30). The reward/risk ratio is 42.8% (i.e. $0.30 divided by $0.70) which is consider very good. Any reward/risk ratio of 20% (or 25%) and above is consider good.
.
Setup (Sell-To-Open) Bear CALL spreads for MS, C, BAC and COF.

Fund A net value is $92,062.
Cash on hand is $103,220.

The entire setup currently at a lost of -$3,030.

100% target profit will be achieved for these vertical spreads if at the expiry Friday, the Stock price do not cross over the nearest CALL option strike price of the vertical spreads.

POSITION MANAGEMENT STRATEGY
Stop Lost : to close position if the lost is equal to OR the lost at Expiry Friday will be greater than the premium collected upfront.
Collect Profit : to close position when the profit is at 80% or more of the max potential profit (i.e. the premium collected upfront).

OPEN POSITIONS

Started Fund C on 1-Jan-09 with initial capital of US$20,000

Fund C started on 1-Jan-09 with initial capital of US$20,000.
Targeted fund to close within 12 months or upon achieving 100% profit whichever occur first.

Fund A Status 31-Dec-08

No trade for the past few weeks.
Dec month typically is window dressing month, good time to make some profit. However, this year 2008 is not a typical year and not sure how the market will behave. So decided not to trade since we are ahead of plan.
Fund net value $95,092 (all in cash), a profit of 90.2% in 4-month.

Fund A Status After Expiry Friday 19-Dec-08

Last 10x PUT option on C expired worthless and kept all targeted profit.
Net Value = Cash Value = $95,092 (increased from original 1-Sept-08 amount of $50,000). Ahead of plan.
Positions all closed. 100% in cash.

Fund A Status

Was trying to BTO some PUTs on shipping companies. Made a silly mistake and bought FDX instead which do not own ships or operate significant sea freights. Cut lost and closed out. A $700 lesson.
Expecting sea shipment operators and freight ship owners to perform badly over next 3 to 6 months. Had been hearing news that the sea shipments out from China has dropped by 80% to 90% for some of the out-going sea-freight lanes (not verified).

Fund Update

Just realized MS will announce earnings next Wed 17-Dec, two days prior to expiry Fri 19-Dec.
MS price at $13.92 still very far 46% away from Strike price $7.50.
As we do not trade through earnings due to unpredictable market response, decided to close out all MS positions.
Proceeded BTC 10x contracts at $0.10.
BTC 10x MS-Dec-7.50-PUT keep profit $986.

C price at $7.83 about 36% from Strike price $5.00.
Decided to close out to lock in profit. BTC 50x contracts at $0.05.
BTC 50x C-Dec-5.00-PUT keep profit $2,052.

Net Fund Value = $95,826 and cash on-hand $95,841.

Fund Update

Fund A :
No trade for the whole week.
Net Value increased from $50,000 (1-Sep-08) to $94,451.
Cash position $97,876.

Fund A Open Positions :-
-10x MS-Dec-7.50-PUT (target profit $1,100)
-40x C-Dec-7.50-PUT (target profit $4,680)
-80x C-Dec-5.00-PUT (target profit $3,720)
-10x C-Dec-2.50-PUT (target profit $ 650)

Two more weeks to expiry Friday 19-Dec. Have to decide whether to close out all positions prior to expiry Friday.

Funds Update (Fund B CLOSED)

FUND B CLOSED as target met. Net value increased 100% from $10,000 (1-Sep-08) to now $20,875 (29-Nov-08) in less than 3 months (target was 12 months). Congrates.

Fund B : Value increased from $10K (1-Sep-08) to $20,875. Target met and Fund B CLOSED. Kept 20% commission on profit made. Returned $18K to investor (nephew).



Fund A : Value increased from $50K (1-Sep-08) to $93,206.

Fund A Open Positions :-
-10x MS-Dec-7.50-PUT (target profit $1,100)
-40x C-Dec-7.50-PUT (target profit $4,680)
-80x C-Dec-5.00-PUT (target profit $3,720)
-10x C-Dec-2.50-PUT (target profit $ 650)

Fund Update

From lesson learnt last month, have decided to close positions that have achieve 70% or more of the full target profit going forward.


Instead of waiting another 3.5 weeks to get full profit of $2,115, have gone ahead to CLOSE out and collected profit of $1,668.
BTC 45x MS-Dec-5.00-PUT (target profit 45x$0.47 = $2,115).
Collected profit $1,668 about 79% of full potential.

Fund A on Expiry Friday 21-Nov-08

A very volatile week for stocks and MS. MS ended at $10.05.
End results :- kept a total profit of US$5,890 only instead of the targeted full potential of $8,350 for the MS 4-step ladder. Because MS ended below defence line of option PUT-Nov-12.50. The other 3 options expired worthless and kept all profits.




10x MS-Nov-12.50-PUT (target profit $1,650). LOST -$800.
10x MS-Nov-10.00-PUT (target profit $1,100). PROFIT kept.
30x MS-Nov-7.50-PUT (target profit $2,430). PROFIT kept.
20x MS-Nov-5.00-PUT (target profit $3,160). PROFIT kept.

Lesson learnt. Should have closed all positions before travelling to US and take the profit earlier in the range of $6K to $7.3K instead of taking additional full 2-week risk for the additional $1K potential profit.

Fund A & B Update

Wed 19-Nov update as of 11:33pm

Fund A
SELL to Open 20x on C-Dec-7.5-PUT at $1.35.
SELL to Open 40x on C-Dec-5.0-PUT at $0.50.

Fund B
SELL to Open 10x on C-Dec-5.0-PUT at $0.50.

Tue 18-Nov-08 update

Fund A - Both MS and C Implied Volatility still high. CNBC showing Berneke and Paul Hanson answering questions.
C announced cutting workforce by 52,000 people and stock price dropping for the past 2 days, should be close to bottom now.
SELL to Open 25x on MS-Dec-5.0-PUT at $0.40.
SELL to Open 20x on C-Dec-7.5-PUT at $1.09.
SELL to Open 10x on C-Dec-5.0-PUT at $0.43.

Mon 17-Nov-08 Fund Series A & B Update

Today market dropped further since last week. Volatility for MS crossed 200% and C crossed 158%. Decided to setup some positions for Dec month.





Fund A
SELL to Open 10x on MS-Dec-7.5-PUT at $1.10.
SELL to Open 10x on C-Dec-7.5-PUT at $1.00.
SELL to Open 20x on C-Dec-5.0-PUT at $0.40.

Fund B
SELL to Open 10x on MS-Dec-7.5-PUT at $1.06.
SELL to Open 10x on MS-Dec-5.0-PUT at $0.45.
SELL to Open 10x on C-Dec-7.5-PUT at $1.03.

Investment Fund Series A Update for Fri 14-Nov-08

Reached home at 1:00am after coming back from Brazil. Was out the whole week. Zero trades. Looking at the past 5 days chart, market was quite volatile.
MS dropped to $12.03 at end of Friday 14-Nov. None of the stop-lost orders were triggered. All 4 steps of the ladder still in the money. 5 more days to go until 3rd Friday Option Expiry day.

Investment Fund Series A Update for Fri 7-Nov-08

Reached home at 11:45pm after the whole day personal training today. Two more full training days to go on Sat & Sun.
No trade this week. There will be no trade next week as well. Stop-lost order is still in place till end of next week.
If things turn out as planned, profit for this month will exceed the US$5K goal.
For the conservative strategy deployed, no active trading is needed.
At 11:33am EST, MS is at $16.12. Option positions unrealized PnL is +$6,451.

Investment Fund Series A Update for Wed 5-Nov-08

No trades over the past few days. Profit plan for this month likely will be achieved.
At 9:55am EST, MS is at $19.09. Volatility continue to drop to 112%.
Option positions unrealized PnL is +$7,351.
Will be attending personal training from 9am to 9pm this Fri to Sun. And traveling on business trip the whole of next week. Will just put in a far-out stop lost guard for next two weeks.
For the closest option position (strike 12.50) to lose money MS has to drop from $19.09 to $10.85 (i.e. 44%) or lower over the next 16 days till 21-Nov. Probability of keeping the full targeted profit of $8,350 is still high.

Investment Fund Series A Status

Total net asset US$87,147. Cash position US$86,943.

Fund Series B Status

Total net asset US$18,736. Cash position US$19,586.

Investment Fund Series A Update for end Fri 31-Oct-08

No trades today.
MS closed the day at $17.47.
Option positions unrealized PnL is +$6,401.
As a seller, time decay and volatility decay advantage are on our side.

Remarks :-
Dow gone up by 144 points and closed at 9325 against what I have expected.
Nov and Dec typically are positive months for US shares. So, Dow may trends upward if there is no major negative news. However, with the huge market volatility, it will gyrate and can go either direction.

Investment Fund Series A Update for end Thu 30-Oct-08

No trades today.
MS closed the day at $16.09. Implied volatility at 148%.
Option positions unrealized PnL is +$4,991.
Thinking of liquidating all and lock-in the above profit immediately instead of waiting till expiry Friday 21-Nov to keep the full $8,340 (probability around 75%). As a seller, time and volatility decay advantage is on our side. Overall probability of losing money on this ladder of four option steps is less than 5%. Will be travelling on business trip from 10-Nov to 16-Nov and will be left with one week before expiry. Concern that no time to monitor and to place "guarding" auto trades. Likely will liquidate early and close out some or all positions soon.

Total target profit is $8,340 by option expiry Fri 21-Nov
To win full $8,340 by then, MS must stay at the fol. levels or above :-
10x MS-Nov-12.50-PUT ==> 12.50 - 1.65 = $11.85 (target profit $1,650)
10x MS-Nov-10.00-PUT ==> 10.00 - 1.10 = $8.90 (target profit $1,100)
30x MS-Nov-7.50-PUT ==> 7.50 - 0.81 = $6.69 (target profit $2,430)
20x MS-Nov-5.00-PUT ==> 5.00 - 1.58 = $3.42 (target profit $3,160)

Remarks :-
Dow gone up at market open. Market generally on up trend today against what I thought which is down. The Fed cut interest yesterday from 1.5% to 1.0% did improve the market sentiment.

Investment Fund Series A Update for end Wed 29-Oct-08

No trades today.
MS closed the day at $14.76.
Option positions in profit at +$4,105 unrealized PnL. Will continue to hold and may liquidate some prior to expiry Fri 21-Oct.

Remarks :-
Fed cut 50 interest from 1.5% to 1.0%.... one of the lowest that I can remember.
Thu and Fri likely to see more sell down as funds trying to close their books for 2008 and write off their loses. Funds will start buying again next week in early Nov at low prices to have a good start for the year 2009.
Notice that the further away out-of-money price changed that largest when Volatility dropped.
e.g. MS Implied Volatility dropped from yesterday 219% to today 154%. The option MS-Nov-5.0-PUT dropped the largest in price among the other stike-price options from $0.30 down to $0.20, a 33.33% dropped (eventhough the MS closing price dropped from end-yesteday $15.10 to end-today $14.76).

Investment Fund Series A Update for end Tue 28-Oct-08

STO (SELL To OPEN) some trades today to capitalize on the high Implied Volatility level of 220%.
SELL to Open another 10x on MS-Nov-7.5-PUT at $1.25.
SELL to Open another 10x on MS-Nov-5.0-PUT at $0.55.

Fairly volatile market today. Market open with Dow going higher. But MS and C both going down but reversed back up above opening price at closing.
At 10:27am EST, MS dropped all the way to $10.86 with fairly high volume by institutional sellers. Volatility increased to 220%. No major significant negative news on MS. Still believe that the price will stabilize or rise above $12.50 or $15.00 over the next 21 days.

At 10:49am EST total positions Unrealized PnL went down to -$3,635 (not includig profit of +$2,036 on MS-PUT-Nov-5.00).
Setup far away auto stop-losses guard and went to bed.




Stop loss did not get trigger. At market close 4:00pm EST, MS gone back up to $15.20. Unrealized PnL went back to positive at +$915 (not including profit of +$2,536 on MS-PUT-Nov-5.00).
Target profit by expiry 21-Nov is 1650+1100+2450+3150 = $8,350.

Investment Fund Series A Update for end Mon 27-Oct-08

No trades today.
Deepavali holiday yesterday. US market was very volatile and no clear directions. Did not trade.
Existing positions Unrealized P&L (paper gain/loss) reversed from +$420 to -$678. Auto stop-loss did not get trigger last night.
Expecting the unrealized P&L to potentially increase to more -ve before turning around. To continue to monitor and put in place auto stop-loss.

MS ended at $13.73
To win by option expiry Fri 21-Nov, MS must stay at the fol. levels or above :-
10x MS-PUT-Nov-12.50 ==> 12.50 - 1.65 = 11.85 (target profit $1,650)
10x MS-PUT-Nov-10.00 ==> 10.00 - 1.10 = 8.90 (target profit $1,100)
20x MS-PUT-Nov-7.50 ==> 7.50 - 0.60 = 6.90 (target profit $1,200)

(10x MS-PUT-Nov-5.00 ==> 5.00 - 2.60 = 2.40. This position was Open up during Oct Option month. Target profit $2,600).

Probability of wining by 21-Nov is still there with Time Decay and potential drop in Volatility on our side from now till that date.

Remarks :
Hedge fund managers selling to cover margin calls.
Expecting other fund managers to continue to sell their positions and lock in their losses from now till end of Oct (heard they close their 2008 books on end Oct, to be verified). The fund managers will start buying in again in early Nov to prepare for next year (2009), buying low low and have a good start for their 2009 performance.

w.rgds,
Go888Go