02/05 Daily Summary

We got a hammer Today! That indicates we can have a positive Monday, at least a pull back. To me, it also means that if we break this hammer and close on a new low on Monday it will be a fast down-move in the horizon. One way or the other my job is to keep the positions for as long as I can so I can get theta in the process, so I’ll be working on it.

The OEX brought home the bacon. Now is wait for Monday and get on again. The NDX trade is still in the board, while the MNX got hit with the whipsaw from Today’s hammer and I’m shutting it down a bit more aggressively than the NDX.

Before I go and let you enjoy the weekend, here is food for thought: Look at the number of how many days with over 1.5 st. Deviation and 2 st. Deviation on my daily chart! WOW! This is a wild cycle folks, make no mistake about it.
Have a great weekend! Cheers!

02/05 MNX Iron Butterfly

I jumped the gun with my adjustment Today. I wasn’t counting on the possibility of a bounce from the bottom, and when the market was down I closed one of my put spreads and exposed my self to vega risk (flipped to negative vega), not a big deal, but because I was borderline in the P/L, it is back down again. So I decided to take the hit and started closing down most of the position.

02/05 NDX Iron Butterfly

I am happy with the way I was able to keep this trade in the recovery path, if you compare with the MNX Iron Butterfly, you’ll notice that by rolling the entire spreads when I needed I was able to recover faster. Of course, I tweaked Dan Harvey’s rules and did not dump my puts so quickly, if I had done that, it would have exposed the position to a lot of vega and these past two days of increased volatility would have hurt it pretty badly.

02/05 OEX Weekly Iron Condor

This week’s position was a great example of having time on your side. The OEX took a deep dive between Thursday and Friday. From 505 to a low point of 481 on Friday! One standard deviation is about 6.5 points, we moved about 12 points per day. And the position made money!

I have to admit, at one point Today I hesitated and almost, ALMOST closed the trade for break-even. I kept my head in the game and decided not to mess with my probabilities, and simply accept the results. Needless to say, it paid off.
This strategy is super simple, yet it requires one to have courage to trade the probabilities and accept the results. You expect to win more than you lose over time, but losing is still part of the game. This week we won! :)

02/04 Daily Summary

Today was a major down-day in the markets, we broke the recent lows and this may indicate further selling in the horizon. My Iron Butterflies got the benefit of hedging and did not suffer a lot in terms of P/L, the OEX Iron Condor has the benefit of time working for it, it all depends on how active this Friday will be for the OEX position.

02/04 MNX Iron Butterfly

Similarly to the NDX, by keeping my long MAR Puts I was able to keep the trade pretty much under control despite our strong down-side movement. To be fair, I would much more prefer to have another quiet day, but the market does whatever it wants to do, and it seems like it is enjoying moving around. The position is under water and with limited time to recover, may have to call in the month on it.

02/04 NDX Iron Butterfly

Today’s wild down-side movement was not what I expected as a pull back, this shows the bears are still hungry and looking for food. I’m super glad I didn’t drop my long MAR PUTS, as they saved my trade from losing a lot of money Today. Bottom line, my strategy of keeping the Vega exposure under control paid off Today, as even though we moved down by a lot, the P/L on the trade did not suffer much.