Wednesday, June 23, 2010

Remember when Sell Offs were Scary!!!!!

It was not to long ago that I feared for my account everytime we had a pull back or sell off or what ever you want to call it (ok, so a couple of years is a long time in my world now but relativly speaking it was not that long ago). At least until I learned that you could make money to the downside and even then it was hard for me to stick to a trade that was short the market. Any ways my point is, I just thought it was funny when we were up at 113 a few days ago on the SPY and I was actually expecting a sell-off and when we go it, it made me very happy. Oh, how things have changed. Any ways we have pulled back about 45 handles on the SPX in three days. Here is what the chart looks like:

Take note of the candle stick that I highlighted with the blue bubble. In the technical analysis world this is referred to as a hammer candle. And after decent moves these kind of candles often times lead to a reversal in price action, even if only short lived. So with that in mind today I took the opportunity to take off some short premium that I had to the long side and book some profits. With the current positions that I have left on I make anywhere from $0 to $800 between 100 and 113 on the SPY. This is without doing anything and my risk is virtually 0. I have 84 contracts on at variaous prices and with various strikes and buying power wise it is costing me 0.

So on any sort of pop to the upside I will look to take some of the premium I own and sell it into a rally and possible sell some more premium further out in strikes. This is basically what I have on as I write this:

- 12 July '10 114/116/100/98 Iron Condors

-4 July '10 112 Calls (Were part of a 112/113 vertical spread)

-5 July '10 116 Calls

-20 July '10 120 Calls (Left over from some butterflies that I closed out. They were worth less than the commission to close them out as part of the butterfly.)

- 3 Aug '10 110 puts (Were part of a Calendar spread)

- 3 Aug '10 113 Calls (Were part of a Calendar Spread)

I am currently letting theta work against me, but will only allow this for a few days to see if we get the pop I am expecting. Otherwise I will have to move some more inventory that I currently own.

1 comment:

  1. Yeah it's funny once you're positioned for a sell off how you actually root for one. I will never again be fully long and crapping my pants if we sell off. If I have supreme long exposure it will surely be hedged.