We touched 500 today and then pulled back. I've been watching the qqqqs and they did close above the 200 day line today, now if qqqqs can hold the 34 level for a few days then would be a very bullish indicator for RUT to move much higher. I made 2 adjustments today: bot may 370/380 call/short may 38 iwm call@ cost of $188.06 Once again I sold the 370/380 piece and bought the 440/450 may call so now I have the following position: bot may 440/450 call/short may 38 iwm call@ cost of $62.78 I also opened short may 51 iwm put @ credit of $236.82 (I really screwed the pooch on this one as this position was trading for $300+ but oh well I'll deal with it). The plan was to try and open a may 520/510 put cheaper if the market keeps going up. I'm actually regreting opening this position now but I can't really second guess myself now after seeing the sell off after the fact. So I'll just move on and deal with it based on what happens. A pullback of 10% is needed here as the close to 50% move in RUT in the last month and a half is mind boggling to not even get a small pullback. I am more bullish and am expecting a pullback to around the 440-450 level and then another run at 500 but we'll see!
Still going higher and closed above 500 today. Now its time to see how real this rally is. We're less than 10 pts away from the 515-520 level that I think is going to be a brick wall. But we'll see as short term logic seems to have left the market. I'm getting killed so far and am trying to minimize the pain. I made several adjustments today by closing a couple of positions and opening a new one. I did the following: bot jun 320/330 call/short 33 junQ iwm call @ cost of $153.51 bot jun 470/480 call @ cost of $532.36 I sold off the 320/330 spread for $968 and am combining the remainder which results in the following: bot jun 470/480 call/short 33 junQ iwm call @ credit of $282.13 I closed short may 51 iwm put @ credit of $236.82 for $203.75 which resulted in a profit of $33.07. I'm going to open a short 52 iwm put instead if we open higher again. I did go ahead and open the following as well: bot may 530/520 put/short 52 may iwm put @cost of $484.75 If 515-520 does end up being a reversal point then this position will be very useful. If we end up closing above 520 then I'll plan on just selling the 530/520 piece and being short the 52 iwm, we'll see. I closed short junQ 38 iwm put@ credit of $144.34 for $41.18 which resulted in a profit of $103.16 Finally, for bot jun 450/440 put/short junQ 44 iwm put @ cost of $118.54 I sold the 450/440 spread for $198 which results in the following: short junQ 44 iwm put @ credit of $79.46 Here is a list of all the closed and open positions so far: CLOSED POSITIONS short may 39 iwm put @ profit of $16.13 short may 51 iwm put @ profit of $33.07 short junQ 38 iwm put@ profit of $103.16 OPEN POSITIONS bot may 440/450 call/short may 38 iwm call@ cost of $47.78 bot may 440/450 call/short may 38 iwm call@ cost of $62.78 bot may 440/450 call/short may 37 iwm call @ credit of $41.94 bot may 510/500 put/short may 50 put @ cost of $223.54 bot may 530/520 put/short 52 may iwm put @cost of $484.75 bot jun 480/470 put/short junQ 47 iwm put@ credit of $56.89 short junQ 49 iwm put @ credit of $515.41 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 470/480 call/short 33 junQ iwm call @ credit of $282.13 bot jun 350/340 put @ cost of $492.36 short junQ 39 iwm put @ credit of $44.10 bot jun 330/340 call/short junQ 34 iwm call @ cost of $155.06 short junQ 40 iwm put @ credit of $62.58 bot jun 360/370 call/short junQ 34 iwm call @ cost of $153.51 short junQ 41 @ credit of $39.13 short junQ 44 iwm put @ credit of $79.46 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 450/460 call @ cost of $552.36 short junQ 49 iwm put @ credit 0f $527.30
In wait and see mode. It just seems like this market is "destined"/manipulated to touch the 200 day avgs around the 950 level on S&P and 515 on the RUT. So I am patiently waiting to see what happens at those levels. The clock is ticking on the may option positions so at this point if we can even get a pullback down to 480 I'd be willing to wave the white flag, lick my wounds and move on. So lets see if I can get an early christmas present! I opened the following position today: short 52 may iwm put @ credit of $226
For my may positions what I need is for the market to settle under 500 and 50 on RUT and IWM. So I need to get something in place in case we go above 51. I still am not convinced that we will simply bust through the resistance level at 515-520 on the first try, especially going into the level being overbought. Unless we get a gap down on the "sell the news" of the bank tests tomorrow under 500 right at the open, a test of the 515-520 range is essentially a given. My assumption is that we test that range tomorrow and then sell off back to 500 at least before we try again. Obviously I could simply move up one of my 440/450 call spreads by selling the 440/450 call for around $950-975 and then buy the 490/500 for around $700 or so. In which case if 500 holds then I'll have a good shot of making some return....but the market is so darn overbought and getting ready to test resistance that there's a good chance that a sell off triggering all the trailing stop losses could easily take this market down to 470-480 in which case 490/500 spread will lose a lot of money. So I decided to go ahead and do something a little cheaper than buying the 490/500 RUT spread that should give me a little bit of a return. I went ahead and added the following: bot may 25/22.50 tza put spread @ cost of $122 bot may 25/22.50 tza put spread @ cost of $72 What I'm looking at is that if the market tanks tomorrow and we basically put a short term top here then as long as rut is between 450 and 500 next friday, then I would still be able to take a little pocket change in may even with the loss on this position. Which frankly I'd be fine with seeing as how I had a 50% rally shoved down my throat. If we hit the 515-520 range which I'm assuming is a given then I'll go ahead and sell these positions for a small profit. Either way we've only got 7 trading days left in this cycle so the end is near good or bad.
So why there is difference is so much diff in premium for tza? You seem to just pulled out a new trick out of a hat by using tza.
The difference in the tza premium between the two positions is because I originally bought 1 25 TZA this morning when the market was up. I wanted to add 2 spreads so I figured I'd start with just the 25 piece and if the market kept rallying then at least the 25 put would easily double, so I paid $155 to open it. Then of course the market sold off and I was only able to get $35 for the 22.50 put towards the end of the day. When the market dropped I put in another order to buy that spread for 70 bucks as well. So the one that I legged into ended up costing me way more TZA I pulled out of the hat because this ETF wasn't around last year when I was testing. I've been playing with the 3x etfs for a few months mostly for intraday hedging with decent success so I figured I'd add them here since at this point it made more sense to risk $200 bucks to protect against a little upside versus risking 700 bucks. If RUT closes at 525+ then I'd be much more comfortable in moving up to the 490/500 calls but we're not quite there yet.
I made a couple of adjustments today. When we rallied this morning I opened short 53 jun iwm put @ credit of $368.82 Of course then we proceeded to selloff after I got filled and now this position is around 500, FIGURES! Oh well I don't mind seeing a down day anyway. I went ahead and closed short junQ 49 iwm put @ profit of $204.23 The 49 iwm put is out of the money and doesn't provide as much protection against my short ITM junQ calls as the 53 put should (plus the 53 jun put expires 10 days sooner as well)
Sorry about the late update as I made several changes on friday, been a busy week away from the market. I'm still waiting for RUT to pullback under 500. It seems unlikely to happen as expiration weeks tend to be up more often than not, but there's still a chance since this time around we're entering the week with big gains and no significant news. I guess retail sales data on wednesday could be market moving but really I don't think the market cares about good or bad sales at this point, its more fixated on testing the 200 day avg. So it may just be a case of being patient and waiting for the 200 day test and exiting if the test fails as I expect a failed test to take us back to 495. Depending on which day the test occurs this week, enough time premium should have been sucked out to go ahead and exit may, otherwise oh well can't win 'em all. - I added another bot may 25/22.50 tza put for $67 - For bot jun 330/340 call/short junQ 34 iwm call @ cost of $120.06 position. I sold the 330/340 call and this combined with my bot jun 450/460 call @ cost of $552.36 becomes: bot jun 450/460 call/short junQ 34 iwm call @ credit of $305.58 - For bot jun 450/440 put/short junQ 44 iwm put @ cost of $98.06 I closed the 450/440 put spread which results in short junQ 44 iwm put @ credit of $74.94 - I added bot jun 490/500 call @ cost of $602 - I also sold an additional jun iwm 53 put @credit of $433.82 Here is a list of current closed and open positions CLOSED POSITIONS short may 39 iwm put @ profit of $16.13 short may 51 iwm put @ profit of $33.07 short junQ 38 iwm put@ profit of $103.16 short junQ 49 iwm put @ profit of $204.23 OPEN POSITIONS bot may 440/450 call/short may 38 iwm call@ cost of $47.78 bot may 440/450 call/short may 38 iwm call@ cost of $62.78 bot may 440/450 call/short may 37 iwm call @ credit of $41.94 bot may 510/500 put/short may 50 put @ cost of $223.54 bot may 530/520 put/short 52 may iwm put @cost of $484.75 short 52 may iwm put @ credit of $226 bot may 25/22.50 tza put spread @ cost of $122 bot may 25/22.50 tza put spread @ cost of $72 bot may 25/22.50 tza put for $67 bot jun 480/470 put/short junQ 47 iwm put@ credit of $56.89 bot jun 480/470 put/short junQ 47 iwm put@ credit of $16.49 bot jun 450/460 call/short junQ 34 iwm call @ credit of $305.58 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 470/480 call/short 33 junQ iwm call @ credit of $282.13 bot jun 350/340 put @ cost of $492.36 short junQ 39 iwm put @ credit of $44.10 bot jun 330/340 call/short junQ 34 iwm call @ cost of $155.06 short junQ 40 iwm put @ credit of $62.58 bot jun 360/370 call/short junQ 34 iwm call @ cost of $153.51 short junQ 41 @ credit of $39.13 short junQ 44 iwm put @ credit of $79.46 bot jun 380/390 call/short junQ 39 iwm call @ cost of $138.06 short junQ 44 iwm put @ credit of $74.94 short junQ 49 iwm put @ credit 0f $527.30 short 53 jun iwm put @ credit of $368.82 bot jun 490/500 call @ cost of $602 short 53 jun iwm put @ credit of $433.82
So far lady lucks been riding on the SUCK IT train as we've closed under 500 to my shock. I'm still not confident that we will close under 500 this friday. Yeah a down market is nice but thus far the bears have been able to do NO meaningful damage. The bears haven't even been able to take this market under the 10 day avg despite trying for weeks! The S&P went a couple of points under the 10 day and then snapped right back up, and we're essentially sitting on the 10 day avg on the RUT. So hopefully the bears can sack up and do some real damage in the next 3 days, but I'm not holding my breath! Having lost my confidence in the bears I added the following in case we rally to test 515: bot may 25/22.50 tza put for $62 For the following: bot may 530/520 put/short 52 may iwm put @cost of $484.75 I sold the 530/520 put for $962.64 which results in: short may 52 iwm put @ credit of $477.89 If the bears do decide to not show up to the game again then at least I'll have sold out of my 530/520 put for a solid profit. I also opened: short jun 53 iwm put @ credit of $388.82 Finally I closed: short junQ 49 iwm put @ credit 0f $527.30 for $245.75 resulting in a profit of $281.55
It sounds like you got lucky for May expiration but June will require more of the same. Good Luck! Do post your net return for this cycle.