Account value up 4.03% for week on net short index delta. Single names provided negative alpha versus index performance, reducing account performance. Worst drawdown was about -2% on Monday after establishing bear index spread too early. There seemed to be signs of distribution premarket and RTH and the market went further than expected. After which, I reduced short exposure, effectively worsening my breakeven point. Maximum exposure measured by delta dollars was about 2 times account value. Will be looking to increase exposure incrementally to about 7.5 times account value. Current payoff profile is similar to short iron condor, with slight bias to short side. There are still some kinks to work out. At least there is a little extra equity cushion for next week.
Account value up .2% on Monday upon going flat for week. Will restart on Tuesday. I have previously thought of index skew having predictive value for at least short term index direction at skew extremes. This seems to hold. However, skew changes relative to expectations may give indications whether a narrow range day is more likely to be a consolidation before resumption of the longer term trend or a sign of countertrend distribution or accumulation. On another account, took a long position on NVDA premarket based expectations of outperformance due to beta relative to broad index futures during RTH.
The account this journal is based on was down .27% this week. I leaned the wrong way on directional exposure, but theta and vega helped. Net exposure peaked at about 90% of account value and am now flat as I evaluate new ideas in depth over the weekend. The other previously referenced account was down 1.74% for the week. Was wrong on direction earlier in week and my single name longs underperformed. Now flat on that account as well. Overnight gaps affecting the US session and mostly one direction markets are challenging for my current trading methodology. The possibility of these situations will be viewed as a risk, if not a trading opportunity. To address this, I will increase net exposure allocation based upon the open of regular trading hours session and be more disciplined in adjusting directional exposure to indicated trend changes based on daily range higher highs or lower lows. I am trying to parse, quantify changes in my assumptions concerning the impact of the US 2024 Presidential elections. It appears Trump is being received better than expected, from the media, domestic political parties and their factions, to foreign leaders. Further, Trump appears to have additional resources he did not have in his first term, such as Elon Musk, among others, and seems more driven towards implementing needed reforms. There have been concerns over some of Trump's statements. However, If this is still the same approachable Trump who has shown he is capable of reversing direction when his decisions appear to have been counterproductive, things should be good. Cooperative efforts domestically and internationally instead of dissention will likely directly and indirectly increase productivity, leading to lower geopolitical tensions, lower inflation, and more stable economic growth. This in turn may increase business investment through increased appetite for risk, potentially leading to higher market valuations. Perhaps tracking changes in the economic multiplier over time will help quantify the effects of said cooperation. It is still way early in the new Administration, but appears the focus is there. I for one, am feeling very bullish on long term economic prospects for the US and beyond, although work is needed short to medium term and market valuations seem historically high.