Closing the year

I'm looking forward to closing the books on a rocky 2011. In terms of trade, it was tumultuous to say the least. That's a surprising statement considering Q1 of '11 was actually a great time to trade. However, as the year progressed there seemed to be no end to the speed bumps I encountered.

Chronological review:

• Jan-March: Everything was firing at full capacity. That's not to say I didn't have losing days, but the quarter was profitable and gave reason for hope.
• April: I hit a legal snag that interestingly intersected my personal life with my trading life. It cost me 10 trading days and a way too much money. Externally, I was able to deal with it by escaping to Mexico for a week. Internally, it was just extremely frustrating to feel like like the victim and still be forced to play {pay} by the rules.
• May-June: The doldrums began earlier than expected this year. Many of the spreads began there march towards 0. This seemed strangely early and paper was hell bent on selling anything with value in the Fed Funds. I eked out a scratch for the quarter, but not without some last second heroics. 
• July: Dead, didn't trade very well. My partner had a good month, but I was never able to gain traction.I decided to start running {well, actually, I started on June 11th, but now I got serious}with hopes to complete a half marathon and a full marathon by year's end.
• August: At the Aug 9th FOMC meeting, Big Ben decided it would be a great idea to take a few hundred thousand from me, my partners, and my backer by announcing the following, "The Committee currently anticipates that economic conditions--including low rates of resource utilization and a subdued outlook for inflation over the medium run--are likely to warrant exceptionally low levels for the federal funds rate at least through mid-2013." As we all rushed to puke our spreads to each other it became apparent that I would need to find another market to trade.
• Sept: The grind back toward parity was slow and tedious. Little by little I peeled off the pieces of my book that showed small profits and gradually began to march back to even.I ran my first competitive race since 8th grade...and wound up in Jackson Park Hospital's ER with dehydration and hypoglycemia. Not to be deterred {it was just a bad trade, right?} I continued my pursuit of running my first marathon in December.
• Oct: I officially team up with the Neapolitan Man, merged our books and began a quest to add new products. Then the MF disaster struck. It paralyzed our accounts and broke our stride just as we were beginning to make significant headway. We're thankful for our backers who have made us whole, even though they still have outstanding monies with Corzine and Co. 
• Nov-Dec: We remained profitable, though we were never able to regain the swagger we seemed to be rolling with prior to the MF collapse. We identified some of the areas which we'll be focusing some of our additional energies on {trade wise} in the next few months and years. We found our next trading companion as well Mr. PRD {Philosophical Rail Defender} and he begins his tenure at the first of the year. I did run my first ever marathon {a full 26.2 miles} and surprised myself by clocking a 3:10:25.

Looking back...it wasn't a horrible year, but I'd prefer to never repeat it. I have plenty to be thankful for, but there are vast areas that need improvement. Everything from trading, to running, to relationships, to life, I look forward to attacking them all in 2012.

Hopefully, I slip one more post in this year and lay out a few of the goal we have for 2012.

~LH

Reviewing a week

It took me awhile to figure out why manufactures insisted on putting cameras on cell phones. Finally, it has come to me. They did it so that we can take pictures of white boards and be able to disseminate the information at a later date and time.

So here's a whiteboard shot of our calls for the week we just exited:

 The Red column is our agreed upon guess for the week's low and the Blue was our week's high. The small black numbers are the actual prices.

For those of you scoring at home, I created the little matrix below to help with understanding my chicken scratch.

Not a bad week, and though it is completely contrary to my nature, we would have fared pretty well as premium sellers {strangles or outrights}.

From an email with Mr. Practical Thinker:

"... I'm pretty impressed with our calls. I think it's safe to say we accidentally nailed the dual mindset of last week. There was the 'all-clear' knee jerk reaction which got us within $1 of the high of crude, 1 penny of the high in ECM, etc. AND then the lows which came off the 'drip, drip, drip' reality of second thoughts. Which reality will win mind share in the week ahead? Not a very positive lead for the former but the market sure is comprised of the optimistic sort. We shall see...."

He's right, the market is optimistic. They {the ominous marketeers}seem to have grown accustomed to shaking off the brutal headlines and forging forward. It will be interesting to see what happens IF the market ever has real buyer's remorse on the whole thing. You wont see a 1000 point drop in a few moments, but I would say that you'd see a 1500 point drop over 8-10 trading sessions! Like I have said previously, I would love to be long gamma!

~LH