Hello there traders, what’s up?

Hope you are doing great and taking full advantage of this 2018 volatility so far. I have the tremendous honor to share with you that I will (try to) to cover up for my friend and mentor Bobcat Shannon every now and then, whenever he is lost in a middle of nowhere without internet.

Now, to be honest, it’s kind of unfair for me to write my first blog to cover up for such a masterpiece. The bar is too high and what Bob is doing and sharing through his blog is pretty awesome, so it will be tough for me to keep up with so much wisdom and stories. But the way I see it is the following: The place where I am right now in my trading is probably where most of the people that read this blog are in their trading journey as well. Small account, within the first couple of years trading, still trying to figure how to consistently trade a system outside the RUT Condors. So if I can share my point of view of trading EH and compounding out of it from very early stages of my trading life, the “beginner” point of view, it could be a good complement to Bob’s role. Let me put it this way… instead of only reading a Karate-blog written by Mr. Miyagi, you will now also read about the same techniques and training but from Daniel-san point of view…you have both point of view on the same system, from the veteran trader to a rookie one. Does it make sense? I hope so.

Having said that, I’m over-excited about this opportunity and I promise I will do my best to keep you informed, engaged and entertained. And most importantly, keep up with the spirit and main goal of this system. So let’s jump right on it and cover what I understand are the foundations of the system: the trading tools used to generate cash, and the compounding aspect of it. Without the latter, remember, this system would be incomplete, like a cake without the cherry, like a biscuit without gravy, like a Tom without a Jerry. The last step is the most important of all, so we will spend a lot of time detailing a few different ways to implement it.

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Being the first blog I would like to introduce myself before start talking trading. Not that my life is very interesting frankly – especially compared with the one of this blog creator… duh – but because I think some of you might see yourself reflected in some way or another with my journey so far. My name is Franco Coria and I am from Argentina, Oil&Gas brought me and my beautiful wife Sol to Houston a few years ago. I have been part of the Tackle Trading family since May 2016 after the three-day class with Matt (same class than Mr. Cody Maki) in which I met Bob. I paper traded for about 10 months and then I mentored about a year ago with Tim in SLC.

Around October 2017 and with an extensive 6-month-live-trading history under my belt, I visited that beautiful city again. But this time I did not visit my (first) mentor, instead, I went camping with Bob. And that was, for me, the beginning of my trading career. Don’t get me wrong, Mentorship was also key and gave me tools that allowed me to then expand into systems such as this one. But the “click” happened to me during that weekend. No TV, no mobile service nor Trump’s tweets to interrupt us, Pale Ale in hand we talked trading and life for a while. We spent a lot of time reviewing my journey and trading behavior (or the lack of) and came up with a plan in how to properly trade EH. Below you can find a quick overview of that plan and how did it work for me since then.

Trading Overview

I have to say that it was not always rainbows and butterflies in my account. In the first 8 months, I made some common rookie mistakes and others not that common as well, that I am still paying for (Hello VIX !!). So, if you are in your first year of trading, I recommend you to go check the Trading Justice Podcast: Episode 253 where I shared with Matt and Tim a list of 10 lessons learned from my first year in trading (Listen to it HERE). I am sure you’ll find most of them common to you as well. One of the main reasons why I did not make any money the first year was that I did not have a system. Nowadays I focus on two main systems. Cashflow Condors in RUT (Thanks Ty!), and mostly EH.

My trading is pretty much aligned with Bob’s. Below is a quick refresher of it and what/how I have traded so far since October 2017, after my first Environmental Hedging Summer Camp. Note that, also aligned with Bob’s last post, I am currently in a “transition” period from Bullish to Bearish so I don’t have a lot of trades on. Long-term positions covered, hedged condors and just a few (still) OTM naked-puts. Popcorn in one hand, and the other hand in the SELL button ready to shoot anytime soon.

 

AMD (naked puts mostly)

I owned shares for a few months last year, and cashflowed from them for about four months with covered calls, and also naked puts. I know the system does not specifically call for owning a stock from the robin-hood list, however starting with a small account was very appealing to me due to the low price/high premium offered. But then it got kind of hard to manage so I just got assigned with a call and sold them out. Right now I do naked-puts when I see a combination of very good technical setup plus juicy premiums, but not so often. It has lately become BTC-dependent, so it lost me a little bit.

X (naked-put)

Together with TSLA, United States Steel has been a very solid trade for me since mid-2017. With a mix of naked-puts and bull put spreads, I’ve traded it 6 or 7 months and only exited once with a small loss, following my exit rules. This one gives me double-pleasure: not only I’m taking money from a net-negative impact company, but I’m also taking money out of one of the competitors of the company I work for…I should ask for a raise I think.

 

TSLA (bull-put spreads)

One of my favorite trades. I like TSLA a lot and although is volatile sometimes, it has been pretty consistent with the price action patterns and follow ups. I have traded maybe 7 or 8 bull-put spreads and I actually exited my first one with a loss last week after it aggressively broke a major support of $300 on 03/27. It is too expensive to own, and naked-puts are too risky for my account size, so bull-puts work just fine. I think if traded consistently for a year or so, we could keep collecting enough premium with this solely trade to put a down payment for a Model 3. One day, Franco…One day.

FSLR (naked puts/bull put spreads)

I usually trade either this one or SPWR so my portfolio is not over-exposed to the same industry. But FSLR has good prospects and usually very nice premiums. If you have a medium-sized account it’s probably a good covered calls candidate as well. It moves very similar than SPWR with a bit nicer premiums, but too expensive for me to own yet, since I trade with a small account and I like to keep cash always available for hedging (it came in handy last few weeks…)

SPWR (naked-puts and covered calls)

I have sold naked puts many times and three of them I actually got assigned. I own 300 shares as part of the compounding part of this system, and I wrote covered calls on them two months so far. It found some resistance around 8ish the last two weeks, so I have my positon covered as of now. I will wait for a pull-back or resistance break out and issue some naked-puts again. I like $7 as a buying price for compounding. I only sell naked-puts on this one when I know I can get afford assignment (meaning I have or I will have the money to buy it at expiration) so I position size with that in mind. Most of the times I am not assigned…lucky-people’s problems, you know ☺.

Others that I trade much less frequently are FCX, UNG and GDX. If the set-up is very favorable, I might. But UNG and GDX premium suck lately even with a high VIX, and FCX has shown some outside-my-comfort-zone volatility so I’m staying out for the moment.

 

Finally, same as Mr. Miyagi, I have an Individual non-margin (TIER-1) account where I own the clean stocks and write Cov. Calls, plus I do some Tackle-25 there as well (go VIPS !). And a second account with margin (TIER-3) permissions where most of the action takes place.

Tip: work as hard as you possibly can to get TIER-3 if you haven’t yet. Without it, in a small-medium sized account, it will be very hard to trade this or any other options-selling based system.

 

COMPOUNDING: “Rome wasn’t built in one day…”

I am planning to spend most of my time and words on this aspect of the system. Compounding is essential not because Bob just said it, but because what it represents and the “why” behind the action. We do what we do with the ultimate goal of doing something right, and transfer money from something not-so-good to something that will create a positive impact not only to nature, but to our hearts, minds and, if possible, our pockets.

Now, I’m sure you’ve seen Bob blogs traveling the word and thought things of this nature: “Pfff…I can’t do that, I’m not that good…even if I knew how to trade that well, my account is not big enough…I am not going to Tasmania with $200 of cashflow per month!!” Well, first of all, as Mr. Henry Ford said, whether you think you can or whether you think you can’t, you’re right. So the good (and bad) thing is that it depends entirely on each one of us to get there. Secondly, starting out small is an absolutely common denominator among all the successful traders, entrepreneurs and pretty much any successful career path. The other common denominators are perseverance, hard work, and attitude. I’m sure if you’re reading this blog weekly and trading the system, you check most of these boxes.

Bob started with a small account and now his cashflow allows him to travel the world. That is his main compounding mechanism. Floating the world, teaching people and discovering amazing places is his preferred form of compounding and what makes him happy. And as a friend and student of his, it makes me pretty happy too. Now, my situation and my goals are a bit different at this point in my trading life. My account is fairly small (<8k) and here comes the beauty of this system. You don’t have to wait to have a huge account to compound into things that make you happy, give you mind-peace, save you some money, etc. So here’s a quick overview of what we will cover in my portion of the blog, more to come in two weeks.

• Shares of “green” companies
  As I mentioned earlier, I currently own 300 shares of SPWR and write cov. calls from them. I am planning to keep transferring cash from the margin account into the long-term growth account and buy shares of SPWR. I am not planning to take cash out of the cov. calls, but to re-invest in them foreva…

 

• Gardening
  This will be the first step of the 2018 compounding race. We’ll do some trials and review details on different ways to do it. It will be fun! I am hoping that our trading journey and account size grow together with our Kales and Lettuces throughout this year. I will try to detail a plan on how we will compound on this and replace part of our expenses in fruits and veggies with the EH system. This, plus gardening has a ton of similarities to trading so it will come handy to do analogies as well. For example, I’m starting with a very small position-size until I feel comfortable with it☺. I actually planted some veggies the day I knew I was going to write this blog, so we’ll measure progress as we go.

 

 

• Solar Panels
  This is where my dreams start to take-off a little bit. I have not gotten there yet, but I know I will. It is in my goals for 2019 summer and this year we’ll work on designing a trading plan that allows us to get there.

 

During my next blog, if I’m still allowed to write after this one, we’ll cover the following:

• My commitment and goals for this blog during 2018.
• Look for proper set-ups to trade robin hoods and targeted companies during April. Expectancy and trading possibilities with a small account.
• Initiate the path of compounding: how will we use the profits from this system to compound and start walking the path that will lead us to the ultimate goal: food/travel/energy for free.

Cheers,

Franco.