05/06 Daily Summary

I followed my gut feeling this morning, did a cut and roll on 2/3rd of my short put spreads, this really helped me when the market rolled down like the world was ending.. I believe my P/L is worse than it should be because of the last hour wild swing on major market. I need to see where we stand Tomorrow morning.

05/06 NDX Iron Butterfly – MAY/10

This morning I had a gut feeling I needed to cut and roll my puts. So I evaluated the risk profile and saw that it made sense to do it (see attached picture). So I started doing so, I was able to pre-emptively roll 2 of my short puts, but got a glitch on Internet connection and ended up not moving the 3rd one. So, left it alone with a contingent order to hedge the position at 1935.
I evaluated cutting and rolling and it made sense as it improved my position in all aspects except it exposed to a bit more vega, since I had the contingent order to hedge I wasn’t too worried about the vega for a short price space (from 1945 to 1935). Then the market proceed to roll down and never stopped.. I wasn’t watching, and I think my current P/L is not very accurate as it reflects the wild swing we had in the last hour of trading. My game plan is to cut and roll the last short put and keep the trade hedge to see where it stands Tomorrow.

05/05 Daily Summary

I was able to move my downside adjustment to 1935 and maintain the same levels of P/L thanks to the extra day of time decay and perhaps some volatility that is going away. I did adjust my contingent order early in the morning as I did not want it to be triggered in a whipsaw action, I moved it to the lowest point of the day once I noticed we had formed a hammer on the 30 minute chart. It would not have triggered either way, but to be fully honest here I wanted to capture that I made that adjustment.

05/05 NDX Iron Butterfly – MAY/10

As we opened Today bellow the 1940 level I decided to make an executive decision and lift my lower adjustment, moving it further down to 1935 level. My thinking behind it was that we opened with such a gap down that it seemed logic it would try to trade back up and fill the gap. If I was wrong the contingent would trigger at 1935 and I would be down an extra -1% ROI, so it seemed worth for me to do it this way rather than blindly locking the trade down with the extra put.
Worked out ok, now with the advantage of time decay and reduced vols I can leave my down-side adjustment at 1935 and maintain the same P/L level as Yesterday with the adjustment being 10 points further out.

05/04 Daily Summary

Bears are out and seem to be hungry! I got my contingent orders adjusting the trade for me, then manually added the cut&roll and the extra iron butterfly to bring on extra theta. Still in the game and keeping an eye on the prize. Remember the roller-coaster video.. which trader are you? I’m keeping that in mind to make sure I’m the one observing and riding the waves.
Worth re-posting? You bet:
http://www.youtube.com/watch?v=hyFl-IyDUhE

05/04 NDX Iron Butterfly – MAY/10

I’m still in the game, following my game plan, and as you can see I forecasted to be down 7% if hit both my down-side adjustments, as it turns out I’m down -7.5% after going beyond the second adjustment point, not bad.. One think I noticed was that adding the cut&Roll and the extra iron butterfly ended up costing me about 2% in ROI, I would be down only 4.5% if had executed only the hedging adjustments.. I think this will pay off Tomorrow if we pull back slowly and volatility comes back a notch or two.
Bottom line, I needed to increase theta and so I did as I had previously planned to do. No hesitation.

05/03 Daily Summary

Nothing new, we’re going back and forth on a wide range. I’m glad I stuck to my plan this morning, controlling the urge to lean bearish was a great victory for me Today :) Have to be patient this month, plan the trade and trade the plan, follow NDX, keep an eye on adjustment options and making sure there is enough theta to reach the goal.