Making money in a down market!
January 20th, 2010, 1:41 pm EST. Posted under Theta Articles by ThetaTrader.
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DOW +60 @ 10,250
01/26/2010 – ThetaOptions – Theta is taking over now…
So here we are, (6) days after our initial post & our (2) portfolios have managed to gain back their P/L highs we had before the market started to pull back six days ago. The market is currently down 5% (@ 10,250) from it’s peak on the 01/19. Our portfolios are on track to make 2-4% for the month of JAN, which means will we beat the market this the month and squeak out a small gain while the market looks to take 2-3% from the average Joe. If the market were to finish the month right here @ 10,250 then our margin acct will have beaten it by about 7%. That’s a lot considering we’re only risking 10-15K in margin acct or 20% of the total liquidation value. The DOW is down about 5% from 10.700; now that would equate to $2500 loss if our entire portfolio was invested in the DOW. However, we’re looking at making 3-4% for the month AND we did it by ONLY RISKING 20% (15K) of the portfolio.
Current DOW Price: DOW +60 @ 10,250 - 2:07 est
IRA Portfolio: The P/L Open is back UP to $677 with DIA beta weight of +42.3 & Theta value of 12.81
Margin Portfolio: The (MP) is back up to $1233 with a DIA beta weight of +43. Our daily decay rate (Theta) is +$36.78. In theory, that means we’re making $36.78 per day!
Note: The VIX has dropped from 27 back down to 22.80 and that’s a big part of why our spreads are returning to profitability. We sold most of these options during a LOW VIX period.