11/05 Daily Summary

We posted a strong up-side move! Take a look to the price action chart, no wonder this is a difficult month, we're posting several 1.5+ st. deviation days, that is not fun from a non-directional income trader's perspective. That being said, I'm still inside the tent, and working to stay that way on both the MNX and NDX iron butterflies..

I want to thank Vertical Solutions for their nice "current condition profile", this has been a very helpful tool for me to monitor market conditions without having to wonder too much into the price charts intra-day. Not to mention it really helped me on my MNX Iron Butterfly trade (see details on the posting).

Position's Details:
11/05 MNX Iron Butterfly
11/05 NDX Iron Butterfly Paper

Price Action and Forecasts:

11/05 MNX Iron Butterfly

I was caught with my legs down Today. For some odd reason beyond my understanding, I didn't submit the order to hedge against an up-side move. I know for sure I had it there in the profile chart, but forgot to set it up.

So, when I checked the market on my mid-day check, I looked at the price action and thought to myself : "why didn't I get an email notification about filling the long Calls? Humm, did the order fail to fill, or the email is simply late in its delivery.. let me check" Of course, when I opened the trading station, my next thought was: " ohh CRAP!" :)

Ok, what do you do when you find yourself like that? In the past I would simply spiral out of control, hedge the position and watch the market back off, making me even more upset.. Spend the entire day cursing myself for forgetting the contingent order on the first place, and then for ultra-hedging at the market's top...

...This time around it was different. I realized we had already moved 2 st. deviation, an extreme by all means, and that VerticalSolutions was showing a retreat in its strenght.. So, I went to lunch, came back and heged the position after the market retreated and when VerticalSolutions started to show a bounce in market strenght. Nice job Gustavo.. Yes, that is my self coach speaking.. :)

11/05 NDX Iron Butterfly Paper

I didn't do the strangle that I suggested Yesterday, that would have locked in about 8% of profit and we would be down to about 5% Today. The main reason I didn't do it is because I want to stay in the trade and see how it behaves. For future reference, this may be the best approach: to start taking away your chips if the market goes your way.

11/04 Daily Summary

I didn't follow the markets intra-day, and could not watch the last hour of trading, so I missed all that activity. As far as the income trades are concerned, I am supposed to miss them :) So, one less day of stress in my life. The positions are recovering, and the 5-day charts are showing that the push down is easing off.

Position's Details
11/04 MNX Iron Butterfly
11/04 NDX Iron Butterfly - Paper

Price action charts and Forecasts:

11/04 MNX Iron Butterfly

Sold the NOV Put as the market moved Higher, I may need it again if we drop down again Today, getting to the point in time where theta kicks in, so if we stay put for a few days there should be lights at the end of the tunnel.

11/04 NDX Iron Butterfly - Paper

The position is doing good, I've started to consider doing a strangle and buy back one of the short PUT and CALL contracts, that would flatten the trade up but still provide theta to keep on making money through the cycle.

11/03 Daily Summary

It seems we're easing off from the down-side selling pressure, we had a couple of quiet days and a relief on the 5-Day volatility chart. This is a very welcome pause. I've read a nice posting on the Trading the Odds blog and as per Frank's study, the odds favor the up-side prior to FMOC meeting.

The key question to me is, would an up-side movement be followed by a lower volatility? Not sure this would be the case during the FMOC meeting, but then again, we'll know the answer shortly.

Position's Summary
11/03 MNX Iron Butterfly
11/03 NDX Iron Butterfly - Paper

Price Action & Charts