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Strategies for small accounts


Rules are trade options on SPY I.T.M. calls for long, puts for short.
Enter; when Wednesday or any day after wends trades above for Calls/below Puts mon-tues range. 20-22 points on the ES is 1 point in nearest ITM options.
Exit; when you have 40 points (roughly 1.8-2 option points, depends on $VIX) or 3:00 Friday afternoon which ever comes first. Or when the SPY trades over the opposite high/low

We'll use the ES as an example. The week of;
12/29.....+40 points
1/05......+22 points
1/12......+40 points

1/19......No trade
1/26......-25 points Wide range Mon-tues trading
2/02......+40 points
2/09......-10 points Wide range Mon-tues trading
2/16......+10 points
2/23......-30 points
3/02......+25 points
3/09......+25 points

3/16......-10 points
3/23......Flat trade
3/30......+20 points

Total +147 points since start of 2009. Thats +7350 for the ES with one contract. With a max draw down of 1500.

Or my favorite with options would netted about 7 points with options depends on price of $VIX. With a draw down of about $1100. But the Amount to trade the same is much less than the 6400 that it take to trade the ES. about $2200 would get you 10 options on the SPY which would equal one ES.

I have been trading this for a while. Over a year and it works well with a few indicators and scaling in/out helps a bit as well....
For some reason I call this the WEB it was an acronym for something, I have forgot it by now, but the name sticks.
The best weeks by far are those that are a small boxed mon and tues trading range. What you don't want to see is a large up monday then a large down day tues or visa versa. Neither do you want to see 2 big days back to back, I would fade those weeks or stand on the side lines.
The challenge we always face Joe is how do we qualify what is small and large ranges...I'm not trying to be a pain here....I go through the same thing with the 60 minute ranges and the plus and minus off the open numbers...There comes a time when shifts in volatility have to be accounted for....

We also have the concept of gaps....would you sell a gap down on a Wednesday on the open if it gaps below the Mon-Tuesday Range? just some quick thoughts....I still owe ya that bond/email stuff
quote:
Originally posted by BruceM



We also have the concept of gaps....would you sell a gap down on a Wednesday on the open if it gaps below the Mon-Tuesday Range? just some quick thoughts....I still owe ya that bond/email stuff




I would go in the direction of the gap as long as it breaks the range, no matter how large/small so as long as its RTH.

Today we shorted some SPY puts @ 1.98 and ES at 822.5 based on the rules of this thread, hopefully we'll get a breakout above this down channel we are in.
quote:
posted by CharterJoe



Today we shorted some SPY puts @ 1.98 and ES at 822.5 based on the rules of this thread, hopefully we'll get a breakout above this down channel we are in.




Covered the long at 842.5 for plus 20, and covered that short on the puts for +1.25, would have made 2 bucks on long call options.
not sure why u were long the ES as we didn't break the high or the low of Monday - Tuesday range yesterday....perhaps I'm a bit "off" today...
Your right bruce,

I got ahead of myself I'll explain why I did that when I get back. But on holiday weeks I use Tuesdays range only since the trading week is shorter, I'll talk more about it when I get back from vacation heading out the door...Have a great Ester weekend all!
Today being Wend. we traded below mon-tues range, I actually went in the other direction and sold puts I already had and went long some calls. The trade was entering oversold in a bull run, thats one strike and the second strike is how the markets gapped on 4/09 pulled back made a new high and slowly sold off indicating its strength.
quote:
Originally posted by CharterJoe

Rules are trade options on SPY I.T.M. calls for long, puts for short.
Enter; when Wednesday or any day after wends trades above for Calls/below Puts mon-tues range. 20-22 points on the ES is 1 point in nearest ITM options.
Exit; when you have 40 points (roughly 1.8-2 option points, depends on $VIX) or 3:00 Friday afternoon which ever comes first. Or when the SPY trades over the opposite high/low

We'll use the ES as an example. The week of;
12/29.....+40 points
1/05......+22 points
1/12......+40 points

1/19......No trade
1/26......-25 points Wide range Mon-tues trading
2/02......+40 points
2/09......-10 points Wide range Mon-tues trading
2/16......+10 points
2/23......-30 points
3/02......+25 points
3/09......+25 points

3/16......-10 points
3/23......Flat trade
3/30......+20 points

Total +147 points since start of 2009. Thats +7350 for the ES with one contract. With a max draw down of 1500.

Or my favorite with options would netted about 7 points with options depends on price of $VIX. With a draw down of about $1100. But the Amount to trade the same is much less than the 6400 that it take to trade the ES. about $2200 would get you 10 options on the SPY which would equal one ES.

I have been trading this for a while. Over a year and it works well with a few indicators and scaling in/out helps a bit as well....



OK I am trying to get this right, is this translation accurate.

Trade in the money SPY options
In the money calls for long positions
In the money puts for short positions
Entrance Strategy
Enter a long trade (in the money call) on wednesday or any day after tuesday if wednesdays option price is trading above the mon-tuesday range.
Enter a short trade (in the money put)on wednesday or any day after tuesday if wednesdays option price is trading below the mon-tuesday range.
Exit Strategy
When you have 40 points or 1.8 - 2 point movement in option price
or
3:00 friday afternoon
or
SPY trades over opposite high/low - not sure what this means

You would need to trade 10 SPY option contracts to equal 1 ES contract but you need less money to trade options than you would need to trade ES contracts.

Is this accurate?
Yes, thats right.

This system works well. Although I wouldn't recommend trading it like a robot. Like I did this week, it gave a short but I had other things in my collective system that screamed "BUY!!" After all Websters definition of system is;

2: an organized set of doctrines, IDEAS, or principles intended to explain the arrangement or working of a systematic whole.

This is my first, and major goal in my trading.... i.e. don't put your blinders on. Instead use each piece of info as a piece of the puzzle.
The underlining, in this case its the SPY (S&P spyders)