Thankfully for you I'm not going to make you read through this whole post to find out what stock I traded; it was TSLA.
But that still doesn't answer your real question does it?
And as much as I truly don't want this to be some hyped pitch about "make money trading", etc. I think the key is in the details of HOW I made $3,483 trading TSLA last year.
That's where you are going to get the educational benefit of looking back at this real example so that you can use it this year moving forward.
Besides I've always got examples of times, I lost money too that I frequently share: here is one example.
My hope is always that you learn from both my success and failure (I know I learn more from my failures even more so than successes).
First, Here Are The Results: 169 Filled Orders
No time to waste and I'm sure you want to see the proof right?
Below is an exact screenshot from my trading account going back to all of 2013. I've searched and highlighted just the TSLA trades I made, all 169 filled orders.
I contemplated the long list of trades but honestly I think was overkill. Plus you're figures would be too tired of scrolling to keep reading. . .
The 1 Strategy I Used All Year?
Much long time readers know how much I harp on strategy selection when trading. You can pick the right direction and timing of a move but without the right strategy you'll often find yourself on the losing end.
For TSLA, I focused all my attention on one main strategy: the Strangle.
Now this was the main initial strategy I would put on. But you'll see from above in the list of transactions that I did adjust this as needed throughout the year depending on how TSLA moved/earned/, etc.
When I did adjust the strategy, I would roll up or down a short option closer to the market to take in more premium. So for example if TSLA moved higher after earnings I would roll UP the short put side to take in more premium and thus widen my break-even points.
Role Of High Implied Volatility For TSLA
I constantly preach about the role of implied volatility, in your trading system.
We've even created an awesome tool to help you make sure you are on the right side of volatility, and you can watch the video tutorial on that on our YouTube channel here.
For TSLA, last year IV was particularly high and juicy! This gave us the opportunity to sell premium for the better part of the year on a consistent basis.
You'll notice from the chart above just how often TSLA's IV ranking was above the 50th percentile level in red. It's these times when you want to be aggressive in selling option premium.
What Would I Have Done Different Then?
All this is good and well, but I have to reflect on what I would have done differently. And there are three key areas.
1) I would not have fought the trend. Naturally I see the bearish side of things expecting the worst at all times, and this cost me big time with TSLA. While I still make money I could have made MORE money had I not fought the tape all year.
2) Smaller positions. Yes, again I would have rather traded many smaller positions each month. I found when I went back that I would often trade 3-6 contracts at a time and pin my strikes. Looking back I would have been better to trade 1-2 contracts here and there and be able to move with the stock a little more.
3) Create more Iron Condors. Strangles did very well, but I could have used some capital to buy cheap protection for my naked puts/calls when TSLA moved up or down. This would have freed up margin considerably and allowed some additional protection from earnings.
Add Your Comments Or SHARE This. . .
I'd love to hear if this type of example helped at all? What questions or comments did you have about my big trading in TSLA last year? In the comment section below, please share your opinion.
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