09/08 Daily Summary

The estimates for Tuesday were a lot better last Friday. :)

Now, seriously, I need to review to see if it was because of my adjustments, or if it is simply the fact that by end of day Friday most market makers are already pricing the weekend, leaving TOS with an over-optimisc view on what it will be on Tuesday, maybe even a combination of both.. This is the 3rd or 4th time where I see a discrepancy between the estimated and actual over the final weekends

I was watching Dan Harvey's mentoring Today and he mentioned he goes for 10% on his Iron Butterflies. I was going for 20%, well, that being said, the positions still look good, so I plan on hanging around unless we drop in profits to around 10% This will give me a good exposure to what happens on the final week, as it is the first time I get in the "end game" with good money in the bank.

What happened to the IBM Calendar? I'm not sure.. if it continues that way I may need to take it off

Position's Details:
09/08 IBM Calendar
09/08 RUT Iron Butterfly
09/08 MNX Iron Butterfly

09/08 IBM Calendar

Not sure about what happened with the trade, the vols seemed to have increased from last Friday to Today, but the trade lost money.. I'm skeptical and looking to exit if we keep like that.
Previous Posting:
09/04 IBM Calendar

09/08 RUT Iron Butterfly

Very similar to MNX, I had a small drop in P&L as we moved higher and I started moving spreads around to protect the current profits. Notice one key difference: Theta! It is a lot higher in the RUT position, that's because I added capital earlier in the trade, this is still working for me.

Previous Posting:

09/04 RUT Iron Butterfly

09/08 MNX Iron Butterfly

There was a small drop in P&L Today as the market moved up and I started moving spreads around to protect the current profits. My goal is to stay in the trade as long as conditions are good.

I've started to manage inventory, by that I mean avoid having short contracts In The Money, to fix that I use Debit Spreads to perform what Dan Harvey Calls a Vertical Roll: Moving the short further out of the money. This gives a degree of protection to the trade by reducing the gamma and still provides for Theta to continue comming in.

Previous Posting:

09/04 MNX Iron Butterfly

09/04 Daily Summary

Today was a great day! I had contingent orders that took care of me on the MNX position, and by the last hour of trading I cut my deltas back and got ready for the long weekend. Both trades are in the middle of their profit zone, and if we have a flat day on Tuesday, I'll be cashing out at my targets.

One reader asked me about the contingent orders in TOS, I added a quick posting showing how I set them up. TOS has a few tutorials showing a lot more details on how to put them together.

Position's Details:
09/04 TOS Contingent orders
09/04 IBM Calendar
09/04 RUT Iron Butterfly
09/04 MNX Iron Butterfly

09/04 TOS Contingent orders

A blog reader asked me about how do I set up the contingent orders on TOS, I've posted bellow a real example of an order I had Today on the MNX Iron Butterfly. Notice a few things:

1) I usually will give up a bit of money from the "mid" price, the way I think about it, it is the cost of doing business where I'm paying the market maker to take care of my trade without forcing me to be staring at the screen all day. I give up a bit of money, but they take care of the trade while I'm on the day job.

2) I learned the hard way NEVER to have an order running as soon as the market opens (see second area in green). I have my orders trigger about 30 min. after the market has opened. Why? If there is a gap, the order will trigger right away with whatever prices are comming in the TOS pipeline. I had a RUT contingent order once trigger at a price 10 times higher than what it should be, luckly I was up and watching the behavior and was quick enough to get out of the order before they filled me. I also noticed that early in the trading session the prices are higher, and if you get in too soon, you end up paying more than if you waited.

This is where my trade would have ended up Today without the orers, notice my delta would be twice higher, and I'd be down more money than I had by the end of day.

Today was an ev

09/04 IBM Calendar

There is a volatility-related sag forming on the position. It happened because I got the 115Calls when the market was moving down and the vols were high, now we retraced the vols went away and the trade has yet to show profits. I'm debating if exiting the position, will double-check it by the middle of next week.
Previous Posting:
09/03 IBM Calendar