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Elgrey
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Expat finance professional living and working in Hong Kong.
  • February-14 0 comments
    Mar 12, 2014 9:49 PM

    My apologies for skipping February. I did not have much time to post about such an interesting month. We saw multiple rallies in coffee, wheat, cocoa, oil, soybean complex, corn... The whole month was a crazy bulls party. I was absolutely unprepared for that and not only missed rally but also tried to counter it and was beaten. My options portfolio returned second monthly loss during last 12 months.

    Lessons learnt:

    - when selling options do not sell during last month. Yes, theta expires fastest but premiums are low so you can't sell options far out-of-the-money and collect decent premiums. I was usually taking risky bets like 4-5% out-of-the-money and once it became in-the-money I opened futures position to offset the loss and closed it once option ran back out-of-the-money. This strategy worked quite well when markets were flat or when markets moved strongly in one direction. But in volatile months like February options changed status every couple of days. Guessing final price vector became impossible so I had to buyback options and book losses in several occasions.

    - study fundamentals before watching technicals. I relied too much on technical analysis and it backfired on me. Do not really want to elaborate on that simple fact. I earned too fast too much with technicals and loosened the grip on fundamentals. This is something you cannot do.

    Good thing was that I was not overtrading and kept my margin safe so even when heaven fell I did not die and keep my spirits high.

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