Recovery In Progress

After my recent terrible performance I have since scaled back my positions and decided to sell some options. Taking a few higher probability trades should help in terms of confidence and help me make some money while I take a break.

Overall, I do still ultimately think we may have a significant pull back coming shortly, however in staying with discipline it makes no sense to hold through some large losses for the hope of a reversal that doesn't come. Just look what happened from 870 to now, barely a pullback in sight and not significant one at that. I decided to take some higher probability short biased plays instead. Since materials have ripped lately and started to stall I thought it would be a decent play to sell some OTM calls on the UYM with only 10 days to expiration. I did the same strategy for the financials selling OTM puts on FAZ. They are working so far and clearly I would be making more money had I just went long put and call options respectively, but given my recent history I would rather be a seller and have the greeks working in my favor.

I still have calls on ADM and am long /ZC again. I took a bit larger position in corn this time around however once I found out about the USDA crop report coming on weds I decided to scale back again ahead of the announcement. The old me would have likely held but the smart thing to do is to wait until after the announcement and see how the market reacts and then act accordingly. This is the higher probability trade, if it gaps up then that tells me that I should be able to buy dips. If it gaps down I take a smaller loss which is what I need to do at the moment.

I am content to sit on my hands until expiration unless something very compelling presents itself or I need to exit a position prematurely. I may take on a play in LVS but other than that I am not looking at much long until we get a decent pull back.

Total Return for 2009: 134%