Coach. I appreciate your lesson for the sake of discussion. I understand boxing your position. But not 70 points away. Especially when you are hesitant to place call spreads because of an uptrend. I can't understand the logic of this boxing so far OTM.:eek:
Honestly I expected today's large move to be to the downside. So I decided it was a great time to test the BOX adjustment and still have a net credit. CSCO and PFE and others helped push us back higher. The up move was nice but I do not expect it to last so I grabbed the calls now to add to my premium and profit from the sideways downward moves I expect now after the downside move yesterday. The addition of the calls is not related to the BOX, I decided to add them today based on the move higher but overall expectation of downward movement. I chose strikes that even if I was wrong, I still do not think we are getting to 1335 by MAR expiration. I make my analysis and postions as the market goes so you cannot really look at it as one whole move. It developed over the past two days and I am happy with the net 4% return and the strikes I am now in. I am also curious to see how the box plays out so I can feel more confident using it in the future should the need arise. If it ends up being the wrong move, then no harm no foul . I have to to be able to adjust my assumptions and analysis daily and trade with it as I see the market move. the BOX may have been premature but I would rather learn now with a profit then enter dabble with this when the crap is really hitting the fan. Right now I have no worries so I can test it in a comfortable manner.
Coach, I just can't mentally grasp WHY adjust this far out. Forgetting today's up move. I've read your explanation, but I can't agree with adjusting this far out. I would be much more interested in seeing what boxing would do much closer ITM.
Well after this experience I will have a better idea so when it is much closer I am not wasting time testing out someting when the crap is hitting the fan LOL. I would not feel comfortable testing this out with SPX at 1235 and 4 weeks to expiration. This is just my approach , not an absolute right or wrong. Seeing the amount of duckets at risk, I would rather test this out now and get a real feel for it so next I decide to do it in the heat of battle there are no surprises. You do not have to agree so do not fight those feelings of disagreement. You have to trade your money within your own means and comfort level. So if I take a path different than yours, stick with your convictions since you are the one responsible for your money and only you need to make those final decisions. If you get to follow me do it first then better for you
Well market has decided to poke its head back up into the channel. Notice the next level of resistance at the 50-day Moving Average and two overhead trendlines I have drawn. Honestly I have no problem if the market wants to dance around this channel for another 4 weeks. Despite the market not following through on the bearish breakout I described, I still feel comfortable today with the 1335 short strike. on the calls and the 1180 short strike on the puts. The BOX adjustment may prove to be completely unnecessary but as I have said before, I am quite interested in testing it out now under calm conditions and see what happens. <img src=http://i1.tinypic.com/nfjv9e.jpg>
Well I closed my FEB 1190/1205 position for a $0.10 debit and a profit of $0.35 (was sold at $0.45) and a net profit after commissions of $3,750. One reason I did not want to wait until next week was to free up my margin since I have a lot tied up in MAR and wanted to ease that burden. YTD so far is a net profit of $8,250 on average margin of $153,750 (2 closed positions) for a YTD net return of 5.37%. For March I have increased my margin usage and thus the premiums and average margin used will increase. I will update this after MARCH positions close.
Got a couple of trades completed. 1) Sold the March bear call 1330/1345 today for $0.70 credit 2) Yesterday, closed out my February 1330/1340 bear call and 1325/1340 bear call for a nickel each. 3) Currently trying to close out my February bull puts for a nickel each.
Coach: I noticed that your streak for placing a hedge and having the market promptly reverse is still alive and well. Your hedging has become such a reliable market direction predictor, that I'm tempted to go long the opposite way. Maybe when our positions get in trouble as the market moves towards our strikes, the forum group could "pass the hat" and pay you to put on a hedge so that the market will stop threatening us, lol. Let's see what others think.