I would sell the nasdaq. I've been trading for over 16 years. And if you want to stay in this business and have any chance of longevity you will learn to master the art of relative value. The nasdaq is much weaker then the Russell. That could change tomorrow, but right now the nasdaq can't even uptick with the Dow up more then 100 everyday. You would be stupid not to sell the nasdaq. Even better trade would be to go long either the dow or russell and short the nasdaq. That is what I would do. Selling into massive strength is not going to keep you solvent.
Thanks. Your answer was what I was expecting. You did not hide under "well" "if" and gave your clear vision of the market. I hope well make make it in our trading carrier.
hajimow, how is this trade shaping up? Also curious if you have a time or price target (edit: or some other method of exiting).
Not good but I am still hopeful. There was a 10000 contract trade on IWM for March . A trader bought 86 PUT and sold 80 PUT and alo sold 94 Call for about 57 cents debit. This is big bearish spread. So far small cap looks like a stubborn kid that does not want to give up and I am a kind of stubborn trader who does not want to let it go. I think I will win
As you know I am long TZA and losing money on that but I am also selling covered calls and collecting premiums but the premiums are too low.
From news on Thursday Jan 31st: As the iShares Russell 2000 Index Fund trades just off this week's all-time highs, a large position is looking at the downside. More than 303,000 IWM options have changed hands so far today, already almost at its total daily average for the last month. Topping the action is a three-way combination trade in the March Quarterly strike. optionMONSTER systems show that a trader bought 10,000 of the 86 puts for $1.41 and, at the same time, sold 10,000 of the 80 puts for $0.43 and 10,000 of the 94 calls for $0.41. The volumes were more than open interest at all but the lower put strike, but this appears to be a put spread collar. This would suggest that the trader is paying $0.57 to open this position against long shares to protect against a pullback, at least down to $80. The IWM, which tracks the small-cap Russell 2000, is up 0.28 percent to $89.22 in midday trading. Shares have been climbing from support at $76 last tested in mid-November and closed at $90.05 on Tuesday, a new all-time high.
Well, in feb IWM still overperform the other indexes historically, I'm still suspicious at why you selected that particular index -fwiw I had a good january but gave back some of the early gains because of a bearish bias following the initial ramp up - it would have been much uglier had I shorted small caps.
Recently I don't get good entry points although I eventually can close the trade with profit by selling options and reparing but that makes the trade very painful. Today's IWM price action was unbelievable to me. I believe patience will pay off. I also liked the option trade that a big trader did with 10,000 contracts which I posted here. He has put 0.5 million to make 5.5 million in less than two months. Of course his risk is unlimited in theory.
How do you do you know he wasn't spreading that trade against something else? That trade could actually have been a long trade you know.