Market is still heading higher. We're in that first possible reversal point between 440-450. So if we don't reverse here then we'll probably see a quick move to 470 and perhaps 500 but I still believe the move should be capped by the falling 200 day EMA thats around 530. So I am still waiting for a pullback so I do not want to over trade this. So instead I did a couple of small tweaks for now. I had purchased the 430/440 jun call spread a few days ago. Today I sold it and closed it for : bot jun 420/430 call @ profit of $50.28 Instead I moved this up and opend a 430/440 jun call spread bot jun 430/440 call @ cost of $552.36 I also adjusted the following position: bot jun 390/380 put/short junQ 38 iwm put @ cost of $113.34 by selling the 390/380 put spread for $257.68 which results in the following position: short junQ 38 iwm put@ credit of $144.34 I currently have 3 troublesome positions: bot jun 320/330 call/short 33 junQ iwm call @ cost of $153.51 bot jun 330/340 call/short junQ 34 iwm call @ cost of $120.06 bot jun 330/340 call/short junQ 34 iwm call @ cost of $155.06 The 1st position I've done a small adjustment by buying the 430/440 call spread today. For the remaining 2 positions consider the following two positions: bot jun 380/370 put/short junQ 49 iwm put@ credit of $506.80 bot jun 410/400 put/short junQ 49 iwm put@ credit of $327.77 It seemed like these two put positions would become losers if the market stayed above 380 and 410 respectively. So what has occurred is that the market is rallying so high that these two positions are now becoming profitable as the above 3 positions are becoming unprofitable. For instance, right now I can close the 380/370/short 49 iwm put for a debit of about $435 which produces a profit of 506.8-435 = $71.8. Of course I'm still waiting to pull more profit out of this before closing. Essentially, from IWM 44-49 range, the loss from the 34 IWM is offset dollar for dollar by a gain in the decline of the 49 iwm junQ. The third position has a similar behavior except to a smaller degree because I only have a credit of $327.77 on that one. So the situation isn't as dire as it first seems. Of course if this is the bottom and the market continues to shoot higher then I'll have more positions entering the problem zone. In this case I'll have to do more aggressive hedging like switching to ratio spreads for adjustments rather than a one-to-one selling a vert spread to purchase another vert spread. The decision to do this will be based on the 200 day becoming support.
Its been a few days since I updated the journal so figured I'd add a little something here if nothing else to update the gazillion positions I have open right now. So I've been whining that we need to see some sort of a pullback to digest some of these gains. Today we got a pretty nice one. So typically I want to see a nice pullback to the 20day ema when we have a huge rally. If we get the pullback and the 20day is held, I usually consider it to be very bullish. Going into today the 20day EMA on RUT was 409.41 and we put in a low today of 408.82 so pretty close, and we bounced pretty nicely up. So that tells me that this bullish uptrend is still intact and that we might be setting up for a run at 470. Since we got the pullback and we've had a chance to digest some of the rally, there is a good chance that we go higher from here. If we breakdown then I don't really see much support until all the way down to 360 on RUT which is a pretty substantial drop, so it would be in the best interest of the bulls to defend this level and buy this dip. From the point of view of my current positions I'm going to sit back and wait till the market shows a little bit more of its hand. I know which way the market should go based on the past probabilities but I don't know which way the market wants to go or will go at this moment. So I'm just sitting back to see what happens so I can react accordingly. Here is a list of the current closed and open positions for April cycle: CLOSED POSITIONS bot jun 420/430 call @ profit of $50.28 OPEN POSITIONS bot may 370/380 call/short may 38 iwm call@ cost of $168.06 bot may 370/380 call/short may 38 iwm call@ cost of $188.06 bot may 360/370 call/short may 37 iwm call @ cost of $193.34 bot may 400/390 put/short may 39 iwm put @ cost of $188.06 bot jun 480/470 put/short junQ 47 iwm put@ credit of $56.89 bot jun 380/370 put/short junQ 49 iwm put@ credit of $506.80 bot jun 410/400 put/short junQ 49 iwm put@ credit of $327.77 bot jun 480/470 put/short junQ 47 iwm put@ credit of $16.49 bot jun 330/340 call/short junQ 34 iwm call @ cost of $120.06 short junQ 39 iwm call@ credit of $394.53 bot jun 360/370 call/short junQ 37 iwm call @ cost of $118.34 bot jun 320/330 call/short 33 junQ iwm call @ cost of $153.51 bot jun 350/340 put @ cost of $492.36 short junQ 38 iwm put@ credit of $144.34 bot jun 400/390 put/short junQ 39 iwm put @ cost of $133.54 bot jun 330/340 call/short junQ 34 iwm call @ cost of $155.06 bot jun 410/400 put/short junQ 40 iwm put @ cost of $115.06 bot jun 360/370 call/short junQ 34 iwm call @ cost of $153.51 bot jun 420/410 put/short junQ 40 iwm put @ cost of $128.51 bot jun 450/440 put/short junQ 44 iwm put @ cost of $118.54 bot jun 380/390 call/short junQ 39 iwm call @ cost of $138.06 bot jun 450/440 put/short junQ 44 iwm put @ cost of $98.06 bot jun 430/440 call @ cost of $552.36
I think few of your positions are in danger. Also being June calls, you will need to adjust now. Will be curious to find out.
Yes unfortunately once we go over 450 the flood gate to losses open up. We're sitting on 450 right now so I'm going to slowly start adjusting. Today I added the following: bot jun 440/450 call @ cost of $532.36 I still believe that there is heavy resistance around 470 which should be difficult to break so I think I have time to follow the market up. Lets watch the reaction to the jobs report tomorrow. At this point I'm not as concerned about the market going higher as I am about me over adjusting and then having the market take a sharp reversal down on me. So lets see how this plays out.
The jobs report seems to be a non event. Earnings start next week, and the market is still holding. I'm trying to see if maybe its just a matter of driving this thing up to 470 and then the selloff begins. But we'll have to wait and see. In the meantime I went ahead and adjusted the following: bot may 400/390 put/short may 39 iwm put @ cost of $188.06 I sold the 400/390 put spread for $217.64 which leaves me with short may 39 iwm put @ credit of $29.58 Here is a list of my current open and closed positions. Have a good weekend! CLOSED POSITIONS bot jun 420/430 call @ profit of $50.28 OPEN POSITIONS bot may 370/380 call/short may 38 iwm call@ cost of $168.06 bot may 370/380 call/short may 38 iwm call@ cost of $188.06 bot may 360/370 call/short may 37 iwm call @ cost of $193.34 short may 39 iwm put @ credit of $29.58 bot jun 480/470 put/short junQ 47 iwm put@ credit of $56.89 bot jun 380/370 put/short junQ 49 iwm put@ credit of $506.80 bot jun 410/400 put/short junQ 49 iwm put@ credit of $327.77 bot jun 480/470 put/short junQ 47 iwm put@ credit of $16.49 bot jun 330/340 call/short junQ 34 iwm call @ cost of $120.06 short junQ 39 iwm call@ credit of $394.53 bot jun 360/370 call/short junQ 37 iwm call @ cost of $118.34 bot jun 320/330 call/short 33 junQ iwm call @ cost of $153.51 bot jun 350/340 put @ cost of $492.36 short junQ 38 iwm put@ credit of $144.34 bot jun 400/390 put/short junQ 39 iwm put @ cost of $133.54 bot jun 330/340 call/short junQ 34 iwm call @ cost of $155.06 bot jun 410/400 put/short junQ 40 iwm put @ cost of $115.06 bot jun 360/370 call/short junQ 34 iwm call @ cost of $153.51 bot jun 420/410 put/short junQ 40 iwm put @ cost of $128.51 bot jun 450/440 put/short junQ 44 iwm put @ cost of $118.54 bot jun 380/390 call/short junQ 39 iwm call @ cost of $138.06 bot jun 450/440 put/short junQ 44 iwm put @ cost of $98.06 bot jun 430/440 call @ cost of $552.36 bot jun 440/450 call @ cost of $532.36
Yes I did make a couple small adjustments today. Going into earnings season my thought process was that we would most likely see a bounce off the 20 day avg and start to head towards 470 on RUT as earnings would come in slightly better than expected.....which is what is occuring as we are very close to 470. The problem is that I was expecting to hit 470 sometime around when at least 30% of the companies had reported earnings as the market would rally as better earnings start getting priced in. This should have taken a couple of weeks and then after hitting 470, we would start "selling the news" and start heading back down towards 430 on earnings profit taking. This would have been perfect because this would have occurred during the may option cycle and I would have been able to close out my may positions for a decent profit. Such a beautiful plan, absolute poetry in motion...... Damn reality had to intervene and give me a reality bitch slap. So what we have here is that everything's been fast forwarded as we're already at my upside target. So the question is, have we basically priced in most of the upside move here and we're setting up for sideways movement for a couple of weeks and then start falling on profit taking.....or are we literally 46 trading days away from the end of the bear market? I'm not a religious person but if 450 holds on the RUT after earnings season then I will be a believer in the devils bottom on Spooz. The bulls are starting to pull me along kicking and screaming so I am starting to SLOWLY tilt the portfolio to be bullish. Today I went ahead and closed the following positions: bot jun 380/370 put/short junQ 49 iwm put@ profit of $138.74 bot jun 440/450 call @ profit of $55.28 Instead I added bot jun 450/460 call @ cost of $552.36. So what I am looking to do is, if I start to get more convinced in this rally then I will start adding more call verts and closing my out of money puts and re-opening the puts at higher levels so they are in the money. We should eventually get a good 2 to 3 week consolidation period which will increase the probability of getting a decent profit or at least to minimize potential losses. Anyway, the market is closed friday so here is a list of the current open and closed positions. Have a good weekend everyone! CLOSED POSITIONS bot jun 420/430 call @ profit of $50.28 bot jun 380/370 put/short junQ 49 iwm put@ profit of $138.74 bot jun 440/450 call @ profit of $55.28 OPEN POSITIONS bot may 370/380 call/short may 38 iwm call@ cost of $168.06 bot may 370/380 call/short may 38 iwm call@ cost of $188.06 bot may 360/370 call/short may 37 iwm call @ cost of $193.34 short may 39 iwm put @ credit of $29.58 bot jun 480/470 put/short junQ 47 iwm put@ credit of $56.89 bot jun 410/400 put/short junQ 49 iwm put@ credit of $327.77 bot jun 480/470 put/short junQ 47 iwm put@ credit of $16.49 bot jun 330/340 call/short junQ 34 iwm call @ cost of $120.06 short junQ 39 iwm call@ credit of $394.53 bot jun 360/370 call/short junQ 37 iwm call @ cost of $118.34 bot jun 320/330 call/short 33 junQ iwm call @ cost of $153.51 bot jun 350/340 put @ cost of $492.36 short junQ 38 iwm put@ credit of $144.34 bot jun 400/390 put/short junQ 39 iwm put @ cost of $133.54 bot jun 330/340 call/short junQ 34 iwm call @ cost of $155.06 bot jun 410/400 put/short junQ 40 iwm put @ cost of $115.06 bot jun 360/370 call/short junQ 34 iwm call @ cost of $153.51 bot jun 420/410 put/short junQ 40 iwm put @ cost of $128.51 bot jun 450/440 put/short junQ 44 iwm put @ cost of $118.54 bot jun 380/390 call/short junQ 39 iwm call @ cost of $138.06 bot jun 450/440 put/short junQ 44 iwm put @ cost of $98.06 bot jun 430/440 call @ cost of $552.36 bot jun 450/460 call @ cost of $552.36
We printed 469.59 so essentially 470. So this is pretty key as we are at my upside target. So my assumption is that the upside move from here is limited, maybe a quick overshoot to 475ish but we should head back towards 430-435 for some profit taking, we'll see I guess. Last thursday I sold the following: bot jun 380/370 put/short junQ 49 iwm put@ profit of $138.74 As you may recall this position originally started out as a 500/490 put/short 49 iwm put position that I adjusted until eventually closing. Now I want to go ahead and re-establish the original 500/490/49 iwm position. I went ahead and opened the following today: short junQ 49 iwm put @ credit 0f $527.30 This morning, I was thinking that the Goldman earnings tomorrow morning would be the catalyst that could drive this market much higher than my target at 470 or start the decline. So as a result I only opened the iwm portion for now. Reason being that if the market goes higher then I can go ahead and open the 500/490 portion much cheaper than today, or based on the size of the move up I could just close the 49 iwm for a small profit and establish a new position in the 520/510 range. On the otherhand if the market sells off then fine, this position will complement: short junQ 39 iwm call@ credit of $394.53 This essentially forms a short 39/49 strangle at a credit of $921.83. Of course if iwm settles junQ between 39/49 then I will lose $1000 which results in a small loss of $78.17. However, I would love nothing better than to have IWM and RUT settle between 39 and 49 for the sake of the rest of the portfolio So bottom line, if we rally I'll re-establish my 500/490/49iwm position cheaply, otherwise I'll wait and let the market drop which should offset the loss on this position by the gain of all my other positions. I see Goldman release earnings early and blew out the estimates as expected, not much reaction afterwards so far so we'll see what happens tomorrow.
I didn't make any new adjustments today. Right now the market seems to be at a standstill waiting for JP Morgan, Google, GE, and C which all report on thursday and friday. If we close above 470 (convincingly i.e. 475+) then I will go ahead and add additional calls as that would convince me that the 400 level will probably hold in the short term. I don't think that the above 4 companies will deliver anything worth taking this market above 500 in the next couple of days. Plus we've got the 200 day EMA sitting at 519.89 and is dropping so that should provide some bearish pressure as well. On the otherhand if the earnings are unimpressive then we can finally get our pullback to the 430 level. So I am not adjusting right now because I can wait and see what happens with the market over the next couple of days. If we rally, I'm not expecting anything big for the above reasons so I should still be able to open my call verts (I'll probably just have to pay a little more to open them) versus if the market takes a dive then I'll feel like an idiot for aggressively opening up call verts and then the market selling off on me.
Looks like onward and upward on low volume seems to be the motto. Have to admit I'm surprised here at the strength but then if it was predicatble then it would just be boring. My upside target for earnings was 470 which of course has been violated so I am going to start adjusting and tilting to the bullish side. Today I made the following adjustment: bot jun 400/390 put/short junQ 39 iwm put @ cost of $133.54 I closed the 400/390 part of the spread for $177.64 which means I have the following position open: short junQ 39 iwm put @ credit of $44.10 Thats all for today. We'll see what GE and C serve up tomorrow.