My name is Martin and I started investing in stocks in 2006 and trading options in 2012. In 2014 I decided to trade as a business and created a company ZZ Capital Management, LLC. The task of the company is not only to trade but also educate about trading. Although I do not consider myself a trading guru knowing everything about trading I believe that by showing other people my own path to success is the best way how to educate others. I do this via my blog where I post my results – success as well as my fails. I hope my journey to financial independence would help others to gain it too.
How did you get an interest in option trading?
Originally I started trading stocks, but I had a small account to trade stocks successfully. I was looking for ways to boost my trading, how to trade a small account and make money. That’s how I came across options and their ability of leveraging my trades. With smaller money I could make same or more than trading pure stocks.
What actions did you take to learn on option trading?
I started learning before committing money. I searched the internet to find other traders and what they recommended to read and what strategy to use. Then I started reading and learning all I could about options, how they work, how they can make you money, lose you money, and what strategies a trader can apply. Yet it wasn’t enough for me to apply money, so I enrolled to a paid mentoring from a professional trader. That was really a deal breaker in my trading. I learned a lot, but mostly I gained confidence in trading options. I also learned to handle my own emotions and take each trade as a winner even though it is a losing trade. We once opened a trade which went completely bust and it all looked hopeless. Yet my mentor helped me to adjust a trade so we ended winning big. And it was at the time where all stocks around were crashing and everybody was panicking. He said: “The point is to make money even with a losing trade.”
What is your goal/ambition?
My ultimate goal is to trade full time for a living. I want to have a luxury of living my life the way I want it and not being dragged by it. In other words, if I decide to work for someone else, it would be because I want to and not because I have to. When I was a lot younger (a high school student, and not trading at all) our family had a friend who one day decided to trade for a living. He converted his garage into a trading room and traded there. Time to time I could visit him and watch him trading. I admired the lifestyle and freedom trading for a living offered. This was something I wanted for myself. I am happy to see getting closer to my goal.
How do you describe your style? Did this evolve over time?
My trading definitely evolved over time. Although I read a lot and had a mentor, I still thought I was smarter than the mentor and authors of those books. I was greedy, impatient, had no rules or I was breaking them one by one. It was a long way to get where I am today. My philosophy teacher at college once said that “there are life experiences and knowledge which cannot be passed down to other generations and each and every human must learn them the hard way.” I believe, trading is one of them. We are being told so many times to do one thing or avoid another one and yet we make those mistakes again and again.
Today, I may say that I finally settled down, have a solid plan and knowledge of how to trade successfully. This allows me to be aggressive in trading options. I want to be a very active and aggressive trader when I am still relatively young. When I get older it will be time to become more conservative.
How much time do you spend on trading options?
I spend about an hour every day reviewing my positions, recording the end of the day trading, account value and each trade state. I am a spreadsheet geek and I like to record my trades so I can see them from different perspective. It also helps me to be always on top of those trades so if something happens it will not be unexpected event. I want it to be an event I am prepared for and know what to do. This is something what helps me with margin trading. Since I use margin heavily, at the end of every trading day I review all trades and available cash for trading (buying power) to make sure I am OK and not overtraded.
How do you deal with the risk that comes with option trading?
There must be risk involved. If there was no risk, there would be no money to be made. In my opinion people are demonizing risk associated with options. In fact, the risk in trading options is actually lesser than the one when trading stocks. Yes, trading stocks is riskier than options. The problem is that people do not know how to deal with the risk. They do not know how options can make them money, how they can lose them money and what strategies they can use to mitigate the risk. For example, if you sell a put option where is the risk here? How can you lose money? The only way how you can lose money is if the stock plummets and you get assigned. Is it end of the world? Not if you do not overtrade, have not enough money or buying power to buy the stock. If it is an end of the world, then you have no business in trading options.
To illustrate my point let me show you an example of one of my trades which went bad. I sold put options against a stock with 36 strike and a few days later the stock plummeted down to $19 a share. Although people can
panic here, I take it as a challenge. As of now I continue rolling the option trade down and away in time. Today, I own contracts with 32 strike (down from 36) and the stock recovered to 24 a share. Not yet out of the forest but getting close to it. In a few more months I might be able to roll the trade even lower and hoping the stock gets higher. I expect this trade to end as a winner although it will take longer than I anticipated. In fact, I can close this trade early because by selling puts and calls against this position my cost basis is already below 24 a share. And now tell, me, if you bought a stock at 36 a share, what can you do to save it?
What tools/sites/blogs/podcasts do you read on option trading?
I follow a few blogs but it is difficult to find traders blogging about their trades. It is also a difficult topic to write about. There is also a very few free blogs. Most people charge a lot of money to join them and mirror their trades.
What is the size of your option trading account?
I started with $2,000 dollars in 2012, I turned the account into $28,000 value and later liquidated it back down to $1,600. Today, I am up at $3,677 account (since February 2016 when I stopped trading SPX). However, I used boot-strapping strategies to raise money for trading and effectively I trade a $29,000 dollars account but only $3,677 is my own money.
Where do you get inspiration for trades?
I use my own watch list of stocks which I analyze for trading options and I also use other traders in our Facebook group to review their trades and eventually take them if I like what they post.
How do you track your trades and P&L? Where can we follow your results?
I post the results in “My trades &Income” section. I also post monthly results in “My goal…” category at my blog. 2016 trading results and comments are posted here: http://hellosuckers.net/category/my-goal- 2016/
What is the worst trade ever you did?
It wasn’t just one trade but a series of bad trades. I started trading options in 2012 with $2,000 account. By the end of 2013 I turned that account into $28,000 account. Then I thought I was a king of the world and greedy I abandoned my working strategy and started trading options against the index S&P500 (SPX). In February 2016 I finally admitted that it was a huge error and decided to go back to my original strategy. I ended my account back at $1,600 value. Pretty sad seeing myself liquidating a $28,000 dollar worth account. So, all my SPX trades were bad trades.
But there is one trade which stands above them all. It was a trade where by trying to fix a bad trade I gradually increased risk and at the end lost $14,000 dollars in a single trade. For a small account as mine this was a significant blow. What was however worse, was that I didn’t learn from it, didn’t admit that trading SPX strategy wasn’t for me and continued trading it duping myself into trading more and recovering losses. If I stopped back then, I could have saved half of my account.
What is the best trade ever you did?
It is hard to say what the best trade is as all trades I made so far ended winners. But the best of them were two trades – one against LULU when I made almost 4% gain in two days (678% annualized return) and STX trade when I made 1.3% in one day (469.30% annualized return).
Where/how can we follow your progress?
I post my results on my blog. I post monthly results at the end of each month in “My goal…” category. For example, 2016 trading results and comments are posted here:
Older results can be found under “categories”. I also post the results in “My trades & Income”
Each individual trade is also posted in our Facebook group where I post my trades as well as other traders post their trades. It is free to join but the group is limited to 50 members only and inactive members are removed when the limit is reached. We try to be as transparent and open to other members so they can learn and/or use our trades as inspiration for their own trading.