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Tales of a Technician: The May that was

June 7, 2017

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Tales of a Technician: The May that Was

Adios May. We hardly knew ye. But you will go down as the second best month of the year for my trading account so thanks for that! I’ll commemorate your contributions by unleashing yet another in a growing line of insightful retrospectives. It’s time to look back to internalize the good the bad and the ugly. Remember, if we never take time for self-reflection how will we improve? If we never identify mistakes, our behavior will go uncorrected and we will forever fail to reach our potential.

And that would suck.

As a reminder, these monthly retrospectives fall into four categories – the monthly theme, what I did right, what I did wrong, and my trade of the month.

Tech Domination

I’ve settled on the technology sector’s barn-burning ascent for last month’s theme. The race to $1,000 by Amazon and Google certainly captured the attention of the everyday trader. And we mustn’t forget Nvidia’s epic moonshot, or Tesla’s jump to record highs. No doubt I could throw out a dozen other tech darlings. So how did the Nasdaq’s chest-thumping affect my trading?

It didn’t. Though I engage in a fair bit of stock-picking, I steered clear of tech. Not purposely, mind you. I simply didn’t find any setups on the day’s I was scanning. And that’s okay. It’s impossible to nail every trend. There are simply too many asset classes and sectors to have exposure to every single one.

What I Did Right (aka why my mommy should be proud)

I’m not sure if I had any all-star moments this month. The two wounded positions I attempted to nurse back to health were SLV and XOP. I took a bath on some XOP May $36 naked puts, but was able to largely minimize the damage by selling calls against it and rolling down. I shorted May and June 37 calls along the way and later rolled the May $36 puts down to the $34 strike.

It will be a happy day once the energy sector stops sucking wind. Until then I’m stuck playing defense. It’s a great exercise in loss mitigation, though. I’m tempted to move to the sidelines and wait until a new uptrend in XOP takes root. At that point naked puts will have the wind at their back. Two things are preventing me from bailing. First, I’m trying to systematically sell options in the sector regardless of my directional bias. It’s a useful endeavor illustrating the long-term perks of using short puts. Second, as soon as I halt my campaign I just know XOP will bottom:)

What I Did Wrong (aka my last vestiges of stupidity)

I’ve been selling put spreads in SPY and IWM as a core trade and for whatever reason I failed to re-enter both trades last month. Both would have delivered the goods so I missed out there. I was probably wanting to carry less bullish exposure due to the beginning of summer and such. The May 17th market plunge provided a perfect opportunity for entering both positions to capitalize on the higher volatility. Shame on me for not at least throwing something on to take advantage of it.

Trade of the Month

If I had to select a standout trade of the month it would probably be EWZ. But since I already chronicled that particular play in last week’s Options Report, I think it might be helpful to identify which plays I made money on. This will provide an idea of my ticker and strategy selection. Here’s a list of which trades were closed during the month with profits: GLD Bull Put, TGT Naked Put, EEM Naked Put, BBT Naked Put, RUT Iron Condor, XLF Short Strangle, EWZ Short Strangle, IBM Bear Put Diagonal.

Check out the entire 2017 retrospective series:

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