Tuesday, May 25, 2010

ES trade

Yesterday I was watching the ES in after hours and decided to short for a quick play/hedge. I went to bed short and no stop loss because if I woke up and we rallied strong I was willing to take this loss and then close out my three positions. I'd rather stay on the sidelines right now. I got lucky and made $500 but this really served a dual role of a hedge in case we crashed this morning before I could take positions off. I ended up only closing one position  for a $225 loss and decided to keep the other two on because their IV is up so high the BxA spread on the Jan 11' spreads I want to close out are too wide. I'm going to wait for IV to come in and some more passage of time before I attempt to take those off. This means I am gambling that a major market move down doesn't  happen and end up costing me more. I'm not saying it won't happen, I actually fear it enough that I'm looking to cut my risk there. The vertical lines I drew are my entry and exit points. I got up at 6am and decided to close it out when it looked like overnight decline had stopped and broke the trend-line.

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