Bearish trade on the QQQ - first in a while!!!

I have been waiting to pull the trigger on this short for sometime and with the inability to go up as of lat after the recent pop...I am ready to place my bets. I don't get much time trading my personal account but this is a simple of enough trade that I don't really have to babysit that I am willing to pull the trigger. I bought May '11 $57 puts on the QQQQ and sold some 59/60 May call spreads to partially offset some of the theta decay. I am really making two statements with these trades...first I believe that the NASDAQ is setting up for a trade lower...and second that I do not think that the highs at $59.04 will be taken out between now and May expiration.

I also believe that traders are going to start pricing in the end of QE2 soon which I think should put downward pressure on equities. Anyways I am only risking a total of $2,080, but I really am not risking that much because if the highs get taken out I will get out of the position.

Took my last profits on short ZB position, I miss my babies already!

I was conflicted yesterday about taking profits at 119'00. I've had a GTC order in to cover 2 contracts at 118'16 for several weeks. But like I mentioned in yesterday's post, I didn't want to watch profits evaporate as they had in the past so I felt I needed to take some of them. Well sure enough a few hours later my last short contract gets covered at my target price which means I left another $500 on the table from yesterday's close out. But looking at the chart, if 118'14 turns out to be a tradeable low, then I will be happy I got out. What if that low was 118'17 and thus I didn't get out of my trades for being stubborn on price at 118'16? That's the battle I still struggle with, when to override your game plan. It's easy to look at a chart later and say should've, could've, would've. So while it sucks to wake up and realize you probably flushed $500 by not being patient, what I have to remember is I felt it was the right move to make at the time and not second guess myself. Now comes the hard part, being patient and waiting for another good set up. I've got my alerts set up so I will evaluate the landscape when/if those are hit.

There is very little time premium left on my short calls, about $350 total. Essentially I'm out of the market right now. Notice Think or Swim's software is still messed up and showing something is ITM when it's not. I emailed them weeks ago and they assured me they knew about it and it would be taken care of soon. Makes you wonder how safe your money is with them, safety is an illusion anyway.

Taking some more profits on bonds (ZB)

We're down two full points 2'00 in the last 36 hours on ZB. That's kind of a big move and since we're already down from 123'07 to 118'22 in the last two weeks I need to lock in some profits here. The contract I just sold at 119'00 in after hours was shorted at 120'16 back on 3/10/11. I missed my desired exit point weeks ago by a few points and was upside down on that one by as much as ($2500) at one point, so don't want to repeat that performance. I need to concentrate less on calling tops and bottoms and more on taking large pieces of the middle. I've got one short contract left and still short some OTM calls that expire in two weeks. If we get another down move this week I'm probably closing those out early. This has been an incredible ride. I hesitate to close these out not knowing when/if I will get another attractive entry point. It feels like not wanting to go home after vacation is over.

Another first for me trading options

I was executed on an options trade 15 minutes after the market closed. Has this ever happened to anybody else? I'm not complaining, I got filled at my limit price, just wasn't aware it could happen.

April Options Expiration Progress Report

DIS 43 May/July Call Calendar

This is a new position initiated today. Just following an options advisory service on this one. The rationale is that the stock has been rangebound between $40-$44 the last few months. I like calendars in this environment so I'm willing to take this trade based on their rec.

http://screencast.com/t/gLyJ23aLoS

Do Options Decay Over the Weekend?

I have heard several "experts" claim that options decay every day, weekends and holidays included. In my experience I have not found that to be the case. I have sold options on a Friday afternoon, sometimes even before a 3 day weekend, and have found that if the market re-opens at a similar level, the option price at the open is about the same as it was at the Friday close.

It makes sense for this to be the case, I would assume that market makers just use number of trading days in their options pricing model, so theta decay between Fri-Mon is just 1 day. Furthermore it seems to me that the theta decay in the market maker's model probably occurs sometime in the early afternoon on any given day, so all other things being equal the seller of an option at the end of the day should not expect to see any theta decay until the afternoon of the following day, not right at the open.

I am wondering if anyone has any different thoughts on this, and why some "experts" insist that options decay on weekends and holidays?