Trading Plan

Business Plan

Objectives :

• Passive, steady Quarterly income of SGD 1,500.  15% Return On Capital (ROC) per quarter.

Money Management Rules
Trading Capital : SGD10,000
Margin : Used up to 60% of Trading Capital for Initial Margin (IM)

Market/Products : KOSPI 200 (K200) Index Options, Monthly contracts

Timeframe : Daily

Options Strategy : Credit Vertical Spread, Iron Condo

Brokers : Interactive Brokers

Entry Guidelines
A. Position

B. Price

C. Time

Conditions for Entry

1. Implied Volatility (IV) is higher than Historical Volatility (HV)

2. When the volatility is spiking up (that is, a down day)

3. Sell put on a down market; Sell call on a up market

1. Strike outside Straddle range

2. Strike outside One Standard Deviation

3. Strike outside previous highs and lows

4. Delta 10 or lower (not more than 12)

B. Price

- minimum of 0.20 credit or greater

- minimum 12% return on margin

C. Time

- Days To Expiration (DTE) 6-8 weeks (42-56 days)

- DTE not lesser than 49 (consider if volatility takes a huge jump before day 42)

Exit Guidelines
1. Take profit
- Delta <= 5 (usually about 70% of credit)
- target profit >= 70% of credit
- target profit >= 50% of credit when Days In Trade is <=5

- 7 < DTE < 14
- exit the position before DTE is less than 1 week (start staring at it when DTE is less than 2 weeks)
- exit with whatever profit or break even if possible, else exit with a small loss

- 25 < Delta < 30 and DTE < 30
- Loss >= 200% of credit and DTE < 30

Risk Management

Risk

Reward

Break Even