Getting Back, Going to View this Less as a Blog and more as a Trading Journal

The more I think about it the more important I think it is to keep a trading journal. I'm going to be posting my trades here for my sake once again. I think making it public helps keep me honest, and forces me to have a fully rationalized trade plan. It'll make sure I don't cut corners on the journal entries.

Just to recap, my 2009 performance came in at 100%, well 99.8%, but I'll round that up. Handily beating my after-tax goal of 25% a year.

The only big plays I've done since posting was selling an M&T Bank (MTB) short January 2011 put at a strike of 65 for $15. At the time MTB was trading at around 66 - can't remember exactly because I didn't write it down. I closed out of that position on 2/4/2010, buying back the put for $8.50 to reduce risk exposure when the market pulled back a couple weeks ago.

I also sold a Chipotle (CMG) February 2010 put short at a strike of 90 for $4.50. This was done with Chipotle trading around 88, as a potential way to buy into Chipotle. However, on a big analyst upgrade CMG shot up a few days later above 95. After a good earnings report Chipotle has reached $105, and my short put has expired worthless. I don't mind missing this move, as I already captured about 1/3 of it with my option play. I am looking to sell another short-dated put on CMG at either a 90 or 95 strike on any significant pullback - looking for a pullback around $100.

Although much of my gains from 2009 came from option plays with Apple. So far, in 2010 I have yet to learn from my failed option moves of AAPL in 2009. I got really bullish about AAPL around the January 25th conference call, where I correctly expected them to finally change their GAAP iPhone accounting. Apparently, this was already priced in - wish someone had told me because I got long two 220 February calls for $5.50 each when AAPL was trading around $210. I ended up closing them out for $1.50 each - a total loss of $800. My biggest lose from a single trade yet. I have decided that I am not an option buyer, I am an option seller.

I think it's easier to make mistakes on the buy side of options as theta hurts you, and harder to make mistakes on the sell side as theta helps you.

I have sold a $220 January 2011 AAPL put for $50, now trading at $36.8. I am also staying short a $220 July 2010 AAPL put I sold for $27.67 and its sitting right where I sold it. I added the $220 July short put when I was really bullish in January. I am proud to say I stomached the pullback to $188, when my stomach wanted to take a loss on the July put. 'Just wait til July, just wait til July' got me through it though - a mantra that doesn't work for me on the long side of options.

Finally, back in December I bought a share of BRK.B for $3,365. I thought Berkshire was undervalued as it was, underperforming during the rally from July onward. Once, I heard about the stock-split for the BNI deal, I couldn't resist owning a share of such a great company for its historic first stock split. I also thought the S&P 500 addition rumors had some validity to them, and it turns out I was right. After the split I owned 50 BRK.B's at a cost basis of $67.30. BRK.B closed Friday at $78.73 - when I first bought in I thought a sell price target of $4,000 was good. And I think I'll stick to this, I have a limit sell order on at $79.88 - gotta front run all the sellers at $80 a little bit.

I think Berkshire is such a great company I wouldn't mind keeping it as a buy and hold component of my portfolio long-term, but given such great gains on such a short time-span I must take them. I will look to re-enter at a lower price through short-dated put sales (awesome that you can trade options on BRK.B now, kinda hard to afford 100 shares at 3.5K).

Overall, up 2.9% YTD - not bad considering the blunder with AAPL calls.

Alright, that's quite the post - lots to write down when you don't do it for months. Feel like I've been reading Philip Davis too much and I'm picking up his writing style, haha.