Today's whipsaw action hit me on the RUT position, the MNX trade had much better luck, so far so good, the portfolio is profitable, not as much as I wanted because of a bad decision I made on the RUT trade, but nevertheless, it is live and learn. As long as I learn as I go, I should be ok.
Position's Summary
09/30 RUT Iron Butterfly
09/30 MNX Iron Butterfly
Wednesday, September 30, 2009
09/30 RUT Iron Butterfly
RUT triggered two of my down-side adjustments, I turned the computer early in the session and notice that we were trading around 598, 1 standard deviation down.. Then I decided to place a contingent order to sell the NOV Put at 610, thinking if we bounce back hard, It is a good idea to get rid of it.. In perfect 20x20 hindsight, that decision wasn't very good. We bounced hard, hit the 610 level and came back down again...
When it was all said and done, selling the 510 Put ended up costing me 2% of the trade's P&L. Not to mention that I felt pretty bad for most of the day for making the decision of changing the plan mid-day.
How can I avoid that in the future? Simply trusting the plan I set the day before the market opens, this is the time when my decision making is not affected by market movement and I'm much more likely to make the right choice.. So, another item for my trading checklist: set the contingent orders and forget about the trade untill the final hour, where I can easily make any adjustments if needed.
On the bright side, the position theta is good, and I suspect most of the P&L drop is due to the volatility increase, so eventually that money will return as volatility has to go to zero as we approach OCT expiration.
When it was all said and done, selling the 510 Put ended up costing me 2% of the trade's P&L. Not to mention that I felt pretty bad for most of the day for making the decision of changing the plan mid-day.
How can I avoid that in the future? Simply trusting the plan I set the day before the market opens, this is the time when my decision making is not affected by market movement and I'm much more likely to make the right choice.. So, another item for my trading checklist: set the contingent orders and forget about the trade untill the final hour, where I can easily make any adjustments if needed.
On the bright side, the position theta is good, and I suspect most of the P&L drop is due to the volatility increase, so eventually that money will return as volatility has to go to zero as we approach OCT expiration.
09/30 MNX Iron Butterfly
I resisted the urge to make any adjustment Today, we were trading really close to my first down-side adjustment and I decided against jumping on it, that was a wise decision, as the market bounced up pretty hard after comming within .10 points of the adjustment.
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