Friday, October 8, 2010

10/08 Daily Summary

Continued to close spreads out of my position, Today I got another short call out by doing a debit spread on 2075/2100 calls, by the looks of it, I expect to reach my 5% by Monday next week, go time decay! It has been a long month, a lot of trading and adjusting, yet I like the fact I can control my position and risk exposure in so many ways with the Iron Butterfly that having one or two difficult months in the year is not such a bad deal... Remember, the September trade got me 10% in 6 days, October is making me work for my money, that’s ok :)


Anonymous said...

I think think or swim calculates their P and l using the middle price between the bid and ask,when you close out your positions how much do you account for slippage before you make the decision to close the position? Do you place your orders a nickel away from the middle?

Gustavo's Trades said...

Sometimes I'll have no adjustments and closing is only a matter of closing the original trade, for these cases I place an oder at the middle and wait for the market to move around and fill it.

If I have made a lot of adjustments, like this month's trade, I will exit slowly, one day at a time, or a few spreads at a time, allowing me to control my greeks in the process and taking advantage of time decay during the final weeks. The key here is not to expose yourself to too much delta, if you put an order that flips you to a huge delta exposure, then your next orders MUST be filled or you'll get exposed to a lot of risk, in this case you have to cave in and fill the order with a lot of slippage.

In general I've gotten better about exiting and forcing my price, an alternative is to ammount for about .5 to 1% slippage.