Chapter 3 Trading journal #141–08/05/2019 +$18 (Many Many Options Mistakes)

All the losses within the last 4 hours. Right After, I sold fucking puts because AMZN was so fucking strong and was holding the support line.

Notes:

*For the third time, when the Market is tanking — do not sell puts. Go long shares if needed, this loss will be way better than the actual loss on the puts.

*It’s ok to hold a favorable position into the last 5 minutes. But that’s perhaps a moment when I must get out on the offer.

Options mistake:

• got delta neutral but was still holding strike from the higher price. Greed. I was waiting for an insane IV crush. Greed and Stupidity. I should have covered it right away. (RE-ADJUST PROPERLY)
• Added too many calls when the last AMZN level was broken. I got short instead of being neutral. I should have either avoided it or just gotten out for a small loss. (DO NOT SHORT THE BOTTOMS)
• The same with the puts — I stuck with them. The important level was broken. I should have just gotten out. Knowing what was happening with the market. It was not a fake breakdown, it was real shit going on with SPY. (DO NOT FIND THE BOTTOM)
• Again the same illusion that I had before. SPY will bounce. Let me add more puts. With the puts. I think I should completely avoid adds unless the range is broken to the upside. (NEVER AVERAGE DOWN THE LOSER. ADJUST WINNERS)
• Also, the other mistake why selling more expensive puts when I traded before the less expensive ones. and the Market structure didn’t change in my favor. (CAN’T BE AGGRESSIVE SELLING THE PUTS WHILE CATCHING THE FALLING KNIFE)
• I should have done what Ri does and change my risk to 1 or 2 R that’s it. No more risk on this day. (ADJUST LOCKOUT TO 2 R MIDDAY)
• A month has 22 days to make a count of each of them. But a week has only 5 days. Locking in gains on Monday helps a lot to make more throughout the other days. It had only 5 days to make them count. Don’t ever miss day 1, when you can

In general, this trade was manageable, and I could have made money. I was not trading sharp enough, although I know I can.

Let’s dissect mistake by mistake.

1. The market keeps making new lows, but I decide that AMZN is strong enough to overcome the market.
2. I decided to close the closer strike price (although there was NO market structure breakouts to the upside)
3. I’m adding more to get to the full size, but in reality, this is averaging down.
4. I had a chance to get out of the puts but did not use it. The moment when the Important level of the range was broken, while the market was going down.
5. Sold call in the bottom of the range and didn’t get out on the rejection.
6. I did not cover some of my calls that were ok in the money. Greed.

To sum it up:

I had a series of good decisions in the morning til 12:00. Afterwards, I started thinking about $800-$700 day ( which could have been true if I made no mistakes)

From now on, I have 2 rules:

• Never add to the puts unless it’s broke upside of the range.
• All the entries only sell the pop or buy the dip ( never on the way down)

The bigger the market gap is, the bigger is the probability of a trend day

Trades:

AMZN going long with shares while being short puts was a mistake as well.

CEI +$67

CARS -$9

#1 had a chance here to go short

#2 cut it quickly. I know this pattern.

Read from the beginning: Chapter 0. What it takes to be a seven-figure trader, and how it all started.

or read my latest post: Beginners guide to trading mistakes. Common day trading mistakes with 50+ charts and examples.

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