Expiring Monthly: The Option Traders Journal

The contest has ended and winners have been selected.

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I'm excited to announce the launch of a new online magazine for everyone who trades, or wants to learn to trade, options.


Cover_EM


Published monthly:  Monday, following options expiration. 

 Inaugural issue: Monday, March 22, 2010.


Five of the top options bloggers on the Internet  are contributing editors.  They are:

  • Adam Warner; Daily Options Report

Each issue offers trading insights, opinion, and a variety of options-related statistics.

The feature article may be about any aspect of options or investing.  For the first issue Adam Warner tells the story of the rise and fall of the American Stock Exchange.

Every issue has an interview with someone you want to know better.  For the inaugural issue, Mark Sebastian interviews Sheldon Natenberg, author of one of the true classic books on options:
Option Volatility & Pricing: Advanced Trading Strategies and Techniques
 
It' still a best-seller (for good reason), fifteen years after the 2nd edition first appeared (1994).

Natenberg 

Each of The Five Bloggers contributes monthly:

  • Monthly Options Report – Adam Warner
  • For the New Options Trader – Mark D Wolfinger
  • Income Spread Trading – Jared Woodard
  • Charting the Markets – Bill Luby
  • Market Maker Trading Tips – Mark Sebastian

Other regular features include

  • Questions and answers from readers
  • Follow the Trade: a detailed description of a single trade
    • From entry to exit
    • With commentary
    • With adjustments and the rationale for making them
  • Book Reviews (not in every issue)
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Expiring Monthly is available by subscription @ $99 for 12 monthly issues.

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Pre-Launch Promotion

Take advantage of  our pre-launch promotion, now through Feb 28, 2010: receive one full year of Expiring Monthly @ the discounted rate of $79.

Subscribe here   

To learn more, visit http://www.expiringmonthly.com


Contest: Win a subscription

Post a comment to this page (and this page only, please – so I can find your entry) with a suggestion for the magazine.

  • A topic for The New Options Trader
  • A topic for a feature article
  • Specific options-related data that you want to see featured
  • Questions for any of the Five Bloggers
  • All suggestions on any topic welcome

From the entries, I'll select one winner (earliest post wins if the same topic is suggested more than once) to receive a free one-year subscription.  This is not a random drawing; the best idea (in my opinion) wins.

If the winner has purchased a one-year subscription before the contest ends, he/she receives a one-year extension as first prize – plus an additional 6 months as a bonus.

I'll award two runner-up prizes: One person wins a 6-month subscription, and another receives a 3-three month subscription.  If these runners-up already subscribed by the time the contest ends, the prize doubles: one year instead of 6 months; 6 months instead of 3.


Visit the blogs listed above.  They may also be offering prizes.

We are very excited about Expiring Monthly, and hope you share some of that excitement.  Our aim is to produce the finest content available in magazine format.  Please let us know how we are doing via email. If you prefer, you can send email directly to me.

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53 Responses to Expiring Monthly: The Option Traders Journal

  1. Cliff Frish 02/01/2010 at 3:51 AM #

    Mark: Congratulations and best of luck with the new magazine. A subject that I don’t recall you discussing in this blog is trading options on futures; particularly, options on ES rather than on SPX or on TF instead of on RUT. There are some interesting differences (like margin requirements that change with the value of the underlying), but the options are “substantially similar” to those on the SPX, RUT, SPY, IWM, etc. I haven’t traded futures options (yet) but have been paper-trading some ideas and it looks like it could be more profitable for less margin. And if this suggestion is good for a free subscription – I’ll take it!
    Cliff

  2. jeff partlow 02/01/2010 at 8:10 AM #

    Mark,
    Best wishes on your new monthly journal. Thanks for your commitment to options education.
    My suggestion is to include a graph every month with two lines (current actual VIX reading versus the VIX 5-year rolling average). This chart would be very useful when discussing various options strategies in terms of how a particular strategy might benefit from the market’s current volatility relative to its historical norm.
    Regards,
    Jeff

  3. Mark Wolfinger 02/01/2010 at 8:33 AM #

    Thank you,
    To be honest, I don’t mention options on futures because I have never looked into them.
    There are differences, some advantageous, some not. I know there’s mar to the market margin requirements than can cause a problem.
    Bottom line: I know nothing of these produces and dare not mention them because I do not want to give any mis-leading information.
    Right now you are leading the competition – because you are the first entrant.

  4. Mark Wolfinger 02/01/2010 at 8:36 AM #

    Thanks Jeff,
    I know VIX is of special interest to us and I will pass this along to Bill Luby (the guy doing the charts).
    I appreciate the idea.
    Best regards
    Mark

  5. rickf 02/01/2010 at 9:32 AM #

    Excellent idea! I suspect this will be far more useful/current for many more folks than the existing options magazines … at least the ones I know of, anyway.

  6. Mark Wolfinger 02/01/2010 at 9:47 AM #

    Thanks.
    That was the driving force behind the idea. We can do better!

  7. Jonathanyork.wordpress.com 02/01/2010 at 10:20 AM #

    How about some specific tips for options traders regarding how to use a spreadsheet to evaluate, track, monitor, and chart options trades?
    I’ve found that the “calculators” or “tracking” tools that some sites provide or try to sell usually don’t do quite what I need them to do.
    For example, pulling data from the web into a spreadsheet is an advanced spreadsheet technique and what’s even more difficult is finding real-time options data to grab from the web and have it auto-magically appear in your spreadsheet in the right cells so that your calculations and such are accurate and current. This is something I know how do and I’ll bet there are other traders that would be interested to know how this is done.
    Actually, this topic could be broader… not only spreadsheet tips–but also tracking trades, evaluating progress, how do you calculate returns on options trades, etc…

  8. Mark Wolfinger 02/01/2010 at 10:39 AM #

    sounds good. Thanks

  9. Tim Couch 02/01/2010 at 11:18 AM #

    How about an article on how to pick stocks for Covered Call Writing, particularly with a short expiration, and cover issues beyond high volatility.

  10. Mark Wolfinger 02/01/2010 at 11:49 AM #

    Thanks Tim,
    That would not be an easy task.
    Picking stocks is so difficult that even the professional money managers cannot do it well.
    However, the idea may fly with generic advice. It’s something for us to consider.

  11. Rob 02/01/2010 at 1:03 PM #

    Hi Mark,
    Congratulations on your new endeavor! It sounds like a great idea. I have a few suggestions, since you ask.
    For the new trader:
    –An article that helps new options traders understand and set reasonable expectations with respect to profits and losses. There’s a lot of hype “out there” and a lot of incredible claims.
    –An article that describes calculating returns, and why some of the previously mentioned incredible claims just can’t be real or sustainable (or else everybody would be doing it!)
    –An article that helps Rookies set goals with their trading, and offers ideas for evaluating progress.
    More generic ideas:
    –Interview from time to time with people who are trading for a living. Their experiences, how they got there, likes, dislikes, etc.
    –An article with ideas for diversification among underlyings and discussion of correlation among the indices commonly traded. This could take into account the difference between trading in an IRA vs. a cash account, since some of us use a broad-based index in a cash account for tax reasons.
    A couple of months ago Mark S. mentioned a special announcement on Feb 1 on his blog. I had a suspicion that you guys might collaborate on something! Look forward to it.
    Kind Regards, Rob

  12. Mark Wolfinger 02/01/2010 at 1:15 PM #

    Hey – There’s only one prize!
    Thanks. Definitely something to work with there. Appreciate the input

  13. Andy 02/01/2010 at 1:38 PM #

    Mark,
    This is definitely exciting news! I feel there’s been a lack of accessible, up-to-date options information for the modern day trader. I’m sure that you and your colleagues are well qualified for the task… if the information in the magazine is as enlightening as your blog, it will be well worth the subscription fee.
    Here’s one idea I’d like to see (inspired by NFL pregame shows and your own blog reference to ‘trader survivor’):
    Each month the five of you are given 10,000 to invest in stocks or indexes (or is it indices?). The method of investing should fit your individual personality or style (covered calls, selling puts, calendar spreads, index spreads/condors) and each author can include a blurb about the reasoning behind their choice. The following month, points are awarded to each person based on their percentage gain (ie: the person with the best performance gets 5 points and so on down).
    I think this is a good way to see how various investment methods truly compare as the market changes throughout the year.

  14. Mark Wolfinger 02/01/2010 at 1:56 PM #

    This is a worthwhile idea from the standpoint of making for good reading – the purpose of the magazine. Competition is also a good idea.
    The problems are twofold:
    a)’Picking’ stocks or timing the market is something we’d like to avoid
    b)Any position still open at publication time may be misconstrued by readers as a ‘recommended’ trade.
    I get the ‘compare strategies’ and possibly compare risk management technique – but making the initial trade is going to be a market timing event.
    Nevertheless perhaps we can tweak that to minimize timing and prediction. I’ll think about this and pass on the idea for consideration.
    NOTE: All ideas are being considered. This response is merely my immediate reaction – subject to change.
    Thanks for contributing to the discussion

  15. Dean 02/01/2010 at 3:28 PM #

    Expiring Monthly is a brilliant name and I’m sure will develop a large following. It’s great to see a reasonably priced options letter in what is traditionally the most over priced area of newsletters. Congratulations and good luck on this exciting venture.
    A topic for The New Options Trader
    Gosh so many good ideas already. I was going to suggest building your own options evaluation and tracking spreadsheet, but see that one’s gone already. So how about:
    1. How to use options to compliment a long term investment portfolio.
    2. A discussion on whether options traders should focus on percentages or dollar amounts.
    3. How to calculate returns on puts with a discussion on the two main alternative methods.
    4. When to use different common options strategies.

  16. Donald W. 02/01/2010 at 3:44 PM #

    Congratulation…I enjoy seeing you expand. Glad Bill Luby is also in on this…I enjoy his post at investor village…his thread is very informative and educational.
    Ideals for you: Stay here with us on this blog…Okay-that is self-center. How about a monthly revisit of what strategy work best and why article for prior month. Kind of a hind-sight type of article.
    Guess we all better get in on it early before rates go up after it gets popular.

  17. Mark Wolfinger 02/01/2010 at 5:09 PM #

    I’m impressed with how many good ideas have appeared in just the first day.
    Thanks for adding to that list.

  18. Mark Wolfinger 02/01/2010 at 5:10 PM #

    Thanks.
    I’m going to continue this blog, but some tweaking is necessary. More on that later this week.

  19. jacob 02/01/2010 at 7:17 PM #

    Hi Mark,
    I sent you an email earlier today regarding the effects of supply and demand on option pricing before seeing this post. I figure I may as well throw my hat in with that topic. Looking forward to getting feedback on it either way. Thanks.

  20. Mark Wolfinger 02/01/2010 at 7:51 PM #

    Hat caught. Officially in the ring.

  21. Andy 02/01/2010 at 7:59 PM #

    A couple more ideas for things that might make interesting reading (thanks for asking our opinions, by the way):
    1. A historical analysis of events that affect VIX. The writer can choose a period where VIX has deviated and describe why it happened. Then he can discuss investment methods that are advantageous during those conditions.
    2. An analysis of an individual’s portfolio. Readers can submit their portfolios and the authors review them and make suggestions, ie: make them more delta neutral, improve the diversification, etc.
    Is the first magazine near completion? Will you be giving readers previews of the articles?

  22. Mark Wolfinger 02/01/2010 at 9:24 PM #

    It turns out that I thank each of you for offering an opinion.
    1. Not up my alley. But I passed it along to two of the others why may be very interested. VIX is a frequent topic for them.
    2. I fear the lawyers on this one. Generic advice is one thing, but without an advisor’s license we are not permitted to give out specific investment advice.
    Appreciate the input.
    3. The articles should have been completed by now, but I’m not the editor and have not seen them.
    The interview is with Sheldon Natenberg. That should be excellent.
    The feature article is a historical look at the American stock exchange: The rise and fall.
    I did the ‘Follow the Trade’ column on an RUT (what else) iron condor trade.
    We each answered a question.
    The statistical data and graphs is not complete because we want it to be up to date. I don’t know the specific items being featured, but they will probably vary from month to month.
    If there are previews of the articles, they’ll be available at the magazine’s site. I have enough to write about here.
    http://www.expiringmonthly.com

  23. Roger 02/01/2010 at 10:10 PM #

    Congratulations. I’d enjoy seeing a review of Hoadley’s option analysis software.

  24. Mark Wolfinger 02/01/2010 at 10:21 PM #

    So would I.

  25. rluser 02/03/2010 at 7:41 AM #

    Many print magazines include a single cartoon on the back page. If you can find the right individual, perhaps a piece of humor can be used to highlight an important notion.

  26. Mark Wolfinger 02/03/2010 at 7:51 AM #

    That’s worth considering. I suspect hiring a cartoonist is a bit costly – but there may be an alternative.
    Thanks

  27. rluser 02/03/2010 at 1:16 PM #

    Yesterday (2/3/10) you wrote, “How bad can it get: That’s a data point you want to be aware of every trading day.” I do not think I have seen you express this point quite this way before. On numerous occassions you point out that folks often focus only on how good it could be and ignore the worst (or even likely) case. Perhaps a regular sidebar with an anecdote about ‘how bad it did get’ is useful. We can see the failed financial institutions of recent past, but a monthly reminder to be vigilant about risk can hardly hurt.

  28. Mark Wolfinger 02/03/2010 at 2:13 PM #

    The truth is hat I’m not always aware of just how bad it can get.
    One reason for that is: I own the tails of the curve. So there are no current disasters pending for me. But that’s not always true and being aware of what happens when we get one of at those 5+ standard deviation moves – is prudent.
    As a sidebar? Gosh – I would hope there’s not that much more coming. But that’s wishful thinking.
    Thanks for the idea.

  29. Sina 02/03/2010 at 8:28 PM #

    hi Mark,
    You say you own tails, does that mean you own wings? I thought you prefer closer to the money options.

  30. Mark Wolfinger 02/03/2010 at 8:49 PM #

    Good point. When I say I own the tails, I mean the tails of the risk/reward graph.
    Most iron condors graphs look like a parabola that’s open at the bottom.. Mine is a smiley face.
    In other words, I own extra options (most of the time) so that I don’t lose in a huge overnight move.
    As you noted, I do not own extra farther OTM options. I own some closer-to-the-money options. But even one extra call or put provides protection when the market moves 25%.

  31. Sina 02/03/2010 at 10:43 PM #

    Makes sense. At first I thought you also own cheap options at the fat tails. Thanks for the clarification.

  32. Kim 02/04/2010 at 9:57 AM #

    Someone mentioned tips for options traders regarding spreadsheet tips and tracking trades, evaluating progress in general. I think it’s an excellent suggestion for a topic. I’m using MSNStockQuote function to get data from MSN Money. It’s not Real Time, but it’s good enough for me. However, couple of weeks ago it stopped working for most (if not all) ETF options (SPY, GLD etc.). So I checked directly in MSN Money – they don’t have data for those options. I guess it might be related to the new symbols?
    Another idea could be how to use complimentary strategies. For example: IC is vega negative, calendars are vega positive. What is the best way to combine them to reduce risk?

  33. Kim 02/04/2010 at 10:38 AM #

    I would like to see a topic about VIX. Specifically:
    1. Relation between S&P 500 and VIX.
    2. Relation between VIX and VXX – can we make money by going long VIX and short VXX?
    3. How VIX impacts income options strategies. Specifically – is it worth to wait for spikes in VIX to open ICs and decrease in VIX to open calendars?
    4. How important is volatility skew for calendars?

  34. Mark Wolfinger 02/04/2010 at 11:05 AM #

    Hello Kim,
    Bill Luby writes on some of these topics at VIX and More. Take a look at his blog.
    I will be certain he sees these suggestions.
    #3 intrigues me and I hope to post on that topic.
    Thanks for entering the contest.

  35. Mark Wolfinger 02/04/2010 at 11:08 AM #

    Suggestions noted.
    I have commented on vega risk and combining strategies, but I don’t believe there is a ‘best’ methodology.
    Thanks Kim

  36. Sean 02/05/2010 at 10:05 AM #

    I am a rookie to options. I think in all my previous endeavors to investment, I learn the most from my failures or mishaps. So, if you option gurus can share your mishaps or failures in option trading with readers, it will be a tremendous help to all option rookies.

  37. Mark Wolfinger 02/05/2010 at 11:30 AM #

    Sean,
    I decided this is worth a full reply – look for it next week.
    For now, I’ll just say that I cannot do that (explanation to come). But it may work for the magazine.
    Thanks for the suggestion

  38. Kim 02/06/2010 at 4:06 PM #

    Mark,
    I would like to add one topic to the IV subjest: using spike in IV to protect IC position (or as a general hedge). The idea is as following:
    With RUT currently at 592, sell a straddle with 2-3 strikes below the current price. For example, Feb. 570 straddle would give you downside protection of about 4%. The beauty here is that you are selling high IV, you have pretty good downside protection, but even if RUT reverses and goes up sharply, part of your loss will be offset by collapse in IV, and you might even make money.

  39. Mark Wolfinger 02/06/2010 at 6:58 PM #

    Kim,
    Now I must admit this is quite a different idea and an interesting concept. Something I might ordinarily dismiss without a thought.
    But I found your perspective on trading to be insightful (previous communications) and that makes your idea worthy of consideration.
    You are adding ultimate risk to reduce the risk of owning an iron condor position.
    The final decision for me rests on the fact that I am never willing be be short (even one) naked calls or puts. So this idea does not work for me.
    However, the principle can be used by converting the straddle to a butterfly spread. To prevent the wings from costing a substantial portion of the straddle premium, the wings would have to be several strikes removed from that of the straddle.
    hmm… add the 530/570;570/610 butterfly.
    Bottom line: This trade idea does not fit within my cautious trading zone. I can see its appeal to the more aggressive trader, but that’s not me. That (now less than) 4% protection is far too little for me. I’m sure it works for your comfort zone.
    Thanks for the original thought.

  40. Sean 02/09/2010 at 4:44 PM #

    Hi Mark,
    Thanks for your lengthy explanation.
    As I am only have limited options trading experience, I can’t 100% digest what you are saying. But, I do appreciate your effort in explaining. I will remember to come back to this advice from time to time.
    In trading options, can you suggest some way to track / record your trades or adjustments? Maybe this is trivial to more experienced traders, but, I am still searching for a better way to do it.
    Thanks again!

  41. Mark Wolfinger 02/09/2010 at 6:08 PM #

    It’s my job to help you understand the answer to any question.
    In using a spreadsheet, record date, trade description – usually a line for each option in the trade. Price of trade. Buy or Sell.
    Record the same for the exit and list P/L.
    When you make an adjustment, I suggest a separate line with a description of why the trade was made. This may be better done in a Word document rather than on the spreadsheet. That way you can write as much as you want.
    If you exited one option leg (bought all you were short, or sold all you were long) – record that as an ‘exit for that option.
    Enter data for any new options.
    When entire position is closed, you can sum the P/L.
    This is not ideal. Perhaps someone can suggest an alternative.

  42. Matt 02/09/2010 at 7:02 PM #

    Hi Mark,
    Thanks for all the knowledge you have shared on this blog, it has helped me immensely.
    I think it would be interesting to see something in your magazine called “Good Trade, Bad Trade.” With options there are always multiple ways of playing the same trade idea, so here you could show two or more ways of playing your trade idea and explain why one is better than the other (in terms of expected profit, risk, etc). For instance, if you wanted to trade a credit spread on RUT, you could use real prices to compare potential iron condors to short strangles, etc. And while comparison doesn’t always lead you to a clear choice, it often gives you an idea of what you shouldn’t do.
    Best,
    Matt

  43. Mark Wolfinger 02/09/2010 at 8:37 PM #

    Thanks Matt

  44. Andy 02/09/2010 at 11:59 PM #

    A few more ideas…
    -a variation of what was mentioned before with ‘trader survivor’. Present a certain situation (such as the index coming within x point of your spread, volatility spikes, market rallies, etc) and each author provides a different viewpoint of what trades/adjustments to make in those situations.
    -reviews of various online brokers… comparison of order fills, fees, intuitiveness of platform use (there may be a conflict of interest here)
    -portfolio recommendations (breakdown of stock/bonds/treasury ratios)/investment strategies based on individual goals: retirement, aggressive growth, etc.
    -provide an interactive discussion forum (this is an idea for your own blog or premium site as well), where readers can openly discuss topics with the authors and each other.

  45. Mark Wolfinger 02/10/2010 at 10:01 AM #

    Thanks for the thoughts Andy
    My understanding is that running a forum is too much work. Moderating is a big job – when there are alot of posters.
    This comment section is not a forum, but everyone is welcome to join in the conversation.

  46. Rob 02/10/2010 at 1:10 PM #

    Mark, Sean,
    Interesting topic. I wrestled for a while with the question Sean asked, and ultimately I ended up with a solution similar to what mark suggests.
    I’m using Thinkorswim, and I also keep track of my trades in excel. For each trade I keep track of the options bought and sold, quantity (ex. +4, -4), open date, close date, open price, close price, total entry cost of each leg, total closing value of each leg, P/L for each leg and P/L for the position.
    The trade platform exposes Dynamic Data Exchange (DDE) and I can pull the MARK for each option in real time in Excel. Why bother? Well, once I’ve made an adjustment and taken a loss, the trade platform doesn’t reflect that on the risk graph. I wanted a way to see that I was down (ex. $175) when the P/L on the risk graph indicated that I was positive (ex. $100). For each of my trades I manage risk in an attempt to not lose more than a certain percentage of what’s at risk.
    Now, that being said, I’ve learned to think about losses differently since becoming a regular reader of this blog. Namely that once an adjustment is made (or even before it’s made, for that matter) a loss is a loss, and the adjustment “locks it in”, if you will. So, in a way, it might not be that important to track a given loss in the context of my March condor. But that’s how I’m doing it currently, and it serves my purposes. If anybody has questions about using DDE with TOS I’d be happy to share. One can even calculate the standard deviations real time if desired. Quite interesting.
    Kind regards, Rob

  47. Mark Wolfinger 02/10/2010 at 1:48 PM #

    Rob,
    Record keeping is personal. We record what we want to know.
    But I’m glad to see you recognize the importance of managing the adjusted position, as is, rather than based on the cost of the original trade.
    Your offer to share is great.
    Regards to you,

  48. Don Rubin 02/12/2010 at 9:06 AM #

    Looking forward to the publication. Though its been covered before I’d like to see some rules of thumb on trade sizing. I allocate capital to monthly income trades and to speculative plays (earnings, expiration, biotech) but dont really have a handle on how much I should allocate to a given trade. I am comfortable mangaging multiple positions but certaintly there are limits. I think that would be a great topic for your readers.

  49. Mark Wolfinger 02/12/2010 at 10:18 AM #

    Thank you Don,
    Size is so simple to ignore, yet it’s the number one risk management tool.
    Good suggestion.

  50. Mark Wolfinger 02/13/2010 at 3:24 PM #

    Contest closed, but feel free to post ideas
    Mark

  51. Andy 02/14/2010 at 7:02 PM #

    Hi Mark,
    Another idea I thought of today: I was wondering if you noticed common habits among successful options traders/investors… buy protection, diversify investments, diligently watch the markets, etc. Maybe you could summarize some important traits and why they’re important. Or is everything equal among all professional traders and luck is a bigger factor?

  52. Mark Wolfinger 02/14/2010 at 7:29 PM #

    No can do.
    I don’t have access to the records of other people. I don’t know their habits.
    Thus, I don’t know who i successful and the major reasons why they are winners.
    Luck always counts to some degree, but just like a chess champion remains at the top of the heap; just as the same bridge, backgammon and poker players consistently win or place high in tournaments, so too do investors who play with the odds of success in their favor. For an investor, knowing when to fold ’em, or hedge ’em plays – a huge role in their success.

  53. Jack Kennel 06/30/2015 at 2:44 PM #

    What happened to “Expiring Monthly”?

    I lost track once I left the magazine. But I was told that it is no longer being published.