Tuesday, June 9, 2015

Tuesday's Agenda

No potential earnings plays under consideration for today have met my requirements, and none of the trading signals generated by Monday's markets made the grade. I have nothing new to analyze today.

I shall place some housekeeping trades designed to deal with a quirk within the structure of my brokerage accounts.

Most of my trading funds are taxable. I do, however, have a relatively small tax-deferred account.

That tax-deferred account is too small for the whales that swim in my trading ocean, the strangle option spreads, which are built out of unhedged short options and so make a large dent in my funds available for trading.

The smaller account is, however, a pond perfect for the delightful carp, the hedged iron condor spreads that have a much smaller impact on funds available for trading. (If you're having trouble with the image of an iron condor swimming like a carp in a small pond -- me, too.)

The problem is set in the context of my stringent requirements for the stocks and funds that underly my trades: High liquidity, high implied volatility, low bid/ask spreads. It is, truly, a small universe of potential trades that hits my screen each day.

My solution is to use the smaller account to mirror trades in the larger pool of funds. When I open an expensive strangle position in my taxable account, then I shall mirror it as a lower cost iron condor in the smaller tax-deferred account. The analysis is already done. I'm already keeping close watch on the equity. It's a low impact way to gain more potential profit from my trades.

I'll update the appropriate analyses with those trades after they are placed.

-- Tim Bovee, Portland, Oregon, June 9, 2015


My volatility trading rules can be read here.


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Tim Bovee, Private Trader tracks the analysis and trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment.
No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decision decisions for his or her own account, and take responsibility for the consequences.

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