Wednesday, May 8, 2013

Did we forget that markets trade lower???

I am short all of the above with various strategies. These charts are starting to look pretty ridiculous. My assumption is that eventually we will have a two sided market where sellers will take control for a bit while the bulls catch their breath. I continue to just wait as we continue to grind higher.

Not much else to talk about with markets still at all time highs and the vix super low, doesn't bode well for selling much premium. Only have about 25% of my capital committed.

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  1. As things have traded against me I have continued to trade around the position. Although volatility is low I am still in defense mode as I defend my short position in the /ES. I have been looking for a down tick, but we have not been getting much in that direction.

    So as I feel the prudent thing to do is to collect some premium against my short position to increase my breakeven. So this morning I sold the 1,600/1,575 putspread for 6 points. My new breakeven point is $1,600 on the /ES.

    I have also been selling weekly puts on my long JNJ puts on a weekly basis to help offset the theta decay.

  2. I bought June 1615 ES calls on Monday to lock in a worst case scenario. I'm hoping for either a pullback and/or choppy sideways action so I can at least sell some premium and hopefully pay for that hedge while giving myself about seven weeks in hopes that the market crashes. The Middle East, Kim Jong, bird flu, anything, somebody help a brother out!

  3. I have to say that this market move has been really amusing.

    Do you plan to hold your 1,615 calls until expiration? I have been selling premium and buying OTM calls to define my risk. But I don't intend to hold any of the calls I buy until expiration. I am playing gamma on these and booking profits to increase my effective short price.

    If I sell my 1,650 call, my effective short price is 1,607. I am starting to feel like we could see 1,650 by weeks end. If we got there by Friday the $1,650 call would be worth about 18-19 points at which point I would roll up and out and book the extra 19 points to increase my break even.

    Are you still short 2 /ES?

  4. Yes, still short 2 ES, cost basis was roughly 1478 before I purchased the calls and I paid 27 for the 1615s after not getting my order filled on the 1610s. I've got enough time right now that I'm just sitting and waiting, no solid game plan.