I sell lots of naked puts. Most expire worthless. I buy my way out of some losing positions, but occasionally take delivery of stock. I sell calls against stock that I own and sometimes buy stock just to sell calls against it. I capture dividends from the stocks I hold surprisingly often.
I report all my trades because being honest about what I am doing makes me a better trader. I report where I enter and exit each position.
I do not report the volume I am trading because only my wife, my accountant, and the Internal Revenue Service needs to know the dollar figures my trading represents. You should know, however, that I trade higher volumes in favorite stocks that pay dividends and lower volumes in others.
My activities follow a rhythm centered on the third Friday of each month when options expire. I offer a summary report of trades following each expiration.
You can learn a lot about my approach by reading the trade reports and the discussion entitled My Tools. You can ask questions by using the Contact form and the comment section of the website.
My average annual gain from trading activities over the past five years has been 1.902 percent, but that detail, while true, is misleading. I gained 29.42 percent in 2009 (the first full year I focused on trading options), 11.60 percent in 2010, and then lost 26.97 percent in 2011, 0.98 percent in 2012, and 3.56 percent in 2013. I created the large loss by increasing leverage significantly during 2011. I was not prepared for the sharp spike in volatility that developed in August, did not understand the requirements of hedging such a large position, and bought my way out of positions at premium prices when I ran out of margin.
I learned in August 2011 that experience with leverage during a trending market is not helpful in dealing with leverage during a big reversal, that my ideas about hedging were totally inadequate, and that Good ‘Til Canceled offers can become problematic. I also learned to keep something in reserve for those times when volatility spikes because that’s the best time to make serious money.
Anyone who want to learn more about me should visit www.TomDenham.com where I am the main subject.