I know its been about a month since my last post. With all the moving and upgrading it became challenging to keep up with everything but things are now starting to settle down and we are going to move back in the right direction. I have finally taken the time to consolidate my thoughts and bring a new focus and mission to the brand.

Today I just opened our position for the month of November. Today we closed out last month positions and we had a nice gain, I actually dont thing I could have called it any better. We saw a 15% gain last month.

This month we are looking at 60% probability month based on 1 standard deviation.

Clients should expect 20% return this month based on our probability analysis. The S&P IV is setting at an acceptable position for price action which is around its 9 month median.

I do expect to see some bullishness action in retail and industrial stocks going in the the holidays. I am as Delta neutral as usual and Vega neutral.

The VIX is sitting at 15.42 right now. Volatility tends to show signs off falling off starting in October which would mean higher prices in the market.

Again our strategy is based on conservative neutral plays that allow adjustments up to 20 days into expiration.

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As I get more serious about investing as a business I am starting to dig deep into understanding and memorizing pertinent data. I’m starting by tracking the basic futures. I already have a trading journal and if you do not have one yet, you need to buy one today. Mine is literally just a basic 5.5 x 8.5″ journal I got from Barnes and Nobles.

I went back to paper trading last month and realized I make a lot of mistakes and get called uncessarily because I dont know which positions to close out. I end up leaving a leg open and getting called away on it. If you have ever had to buy stock that you do not care to own then you now what I mean. I have been working with calender spreads since hearing about them on Tasty Trade and I have gotten burned on expiration each time.

Making Money In Options

The strategy that I use combines both iron condors and calenders bought over the course of a week in small increments. This means that I have multiple strikes at times in the same month. It also means that I have multiple position open over different months since I am using calendar spreads. I would personally stop using them but I am determined to master them.

The lesson that I am learning is that becoming a professional investor requires you take investing serious. I know that sounds like simple since but I truly mean it. If you don’t have a record of all your trades or can’t tell me where the S&P was last week then you are not really playing at a high level. I have seen people that can recite any major index range from the 80′s, I am not saying you have to be that involved but you should be able to know the range of the DJIA from last week.

Knowing the current bond coupon rate is important. The current coupon rate dictates the price and return of corporate bonds and the risk in the market.

Here is the FEDERAL RESERVE website that list the bond rates.

http://www.federalreserve.gov/releases/h15/

Treasury Website Bond Rate

Federal Fund Rate

I personally keep track of the 10- Year and the 30- Year. Why? I honestly don’t know but I choose to follow those two rates on a daily basis.

When you watch the news and you hear them taking about interest rates they are referring to the rate at which banks can borrow money from the Federal Reserve Overnight. This rate is known as the  ”Effective Coupon Rate” which is different Federal Fund Rate. The Federal Fund Rate is the interest rate banks pay to other banks in order to meet the reserve requirements overnight. The cost to borrow from other banks is usually cheaper than borrowing from the FED’s which makes them the last place on the list to borrow money from.

Just a random thought that crossed my head. If the federal reserve is bank just like any other bank why do they have a separate rate when it comes to borrowing money. Yes, every bank sets its own fund rate but the FED’s get to set a “coupon rate” which is even more of a premium over all the other banks. This rate controls how much risk banks can take on during the course of business.

If the bank over leverages itself then it knows it will have to borrow money from another institution in order to meet the minimum reserve requirement.

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