5/19 Daily Summary

I'm glad the order I had Yesterday didn't fill. I was pushing for a fill at a higher price to compensate for the risk of having an order without knowing where the NDX would be trading at. As I write this we are moving about 40 points down and the volatility is going higher. I will then wait for end of day to jump in.

Cheers!
Gustavo

5/19 Daily Summary

Sorry, can't post my daily summary chart Today. I'm in Munich and on my way back to San Francisco, just wanted to get re-started on the blog. Looking to add my JUN position either Today or Tomorrow. I have floated an order to enter the trade once the market opens Today, if it gets filled great, otherwise I'll have the position early morning Tomorrow. So far looking at the 1875/1800 puts & 1925/2000 calls, keeping an eye on the donw-side once again this month. I won't add the extra call unless it triggers at 1910 (actually, first it needs to trigger the butterfly order, then the contingent).

Cheers!
Gustavo

05/13 Daily Summary

Still a very choppy market environment, a 1 day standard deviation looks like nothing these days.. On the bright side, the 5 day vol spike chart may be showing some sort of consolidation is starting. That’s what I’m hoping for, as we enter the “hunting” season for JUN contracts.. I will be traveling to Europe next week, so may not be able to post for a few days. Plan on starting a position from there though, likely to enter on Tuesday. Cheers! I closed my accounting for MAY, ended up making a very thin profit, that was AWESOME considering such a wild ride!

05/12 Daily Summary

Sorry I have been out of touch lately, got into a busy period at work. Actually I’m glad my position has been closed, as I wouldn’t have a whole lot of time to dedicate to it. Back on the 11th I closed the short call spread and sold back all my remaining longs when NDX traded at 1960. This was done through contingent orders. For now I’ll kick back and relax until we get into the JUN cycle.

5/10 Daily Summary

Not much to say Today, except that with this sort of price action going on I might just spend the extra money to close my last short call. Don't have much time Today, but will post any action I do Tomorrow.

05/07 Daily Summary

Watch the video again. Which trader are you? Today (and forever as far as I can help) I am the trader on the right, the guy who observes the market conditions and surfs the wave without freaking out. I navigated Today’s up/down/up roller coaster and got myself out of my iron butterfly with PROFITS! Remember, I was down 15% Yesterday. I didn’t go crazy bearish, in fact I actually changed my contingent order to be slightly less bearish than I had planned Yesterday. What happened was that my JUN put hedge suddenly exploded in value, not by my design, but because people in the market were freaking out. So, my job as a trader was to keep it cool, and SEIZE THE OPPORTUNITY :)

http://www.youtube.com/watch?v=hyFl-IyDUhE

05/07 NDX Iron Butterfly – MAY/10

Ok, let me start by saying, what a ride!!! As we opened up this morning my instruction was: look for ways to cut and roll the short puts that are hurting the position. Let the P/L settle down and go for it at the best possible price. Just in case you didn’t read my daily summary and are reading this post isolated, let me make one note: I didn’t go super bearish with my put hedge, quite the contrary, I actually adjusted it this morning to be slightly less bearish (in case of a whipsaw)

Realizing I could not cut and roll (none of my orders were being picked up), I had to sit back and wait a bit longer. I had a contingent order to hedge the trade if we traded at or bellow 1870. Sure enough, we started to go that route and it quickly hit my contingent order.. The market started to roll over once again and I noticed my hedge had given me an opportunity: Negative delta and positive Vega. Perfect Nitro combination for the morning price action

Within about 30 minutes we were crashing, panicky put buyers kept pumping Vols higher. I saw the P/L was jumping around the profitable zone. So, my first reaction is: “CLOSE”.. Then off course, I realized it wouldn’t be this simple, it would be like disarming a bomb, one wrong click could set me up with the wrong delta exposure, given the market’s speed I could be toast quicker than you can say “toast”. So, I took a deep breath and analyzed the exit sequence: Eliminate the delta hog, sell the long puts ASAP for their overpriced value (Vol hyped value) and keep your Greeks under control. I closed my first vertical with the short 1950 puts, and dumped my two long Jun puts. At that point my Greeks were basically FLAT, no delta, no gamma, positive theta and small vega.

What happened was that I had rolled 2 of my short 1950s Yesterday, once I closed the 1 remaining vertical, I then Had 3 short call verticals and only 2 short put verticals. Because I locked in gains from my previous transactions, thanks to those over-priced puts, I was simply navigating flat with profits locked in. Because you never know if those profits were only due to expanded bid/ask spreads, or whatever reason, my next step was to close all short PUTs, balance the remaining trade and leave only one short call left (2050 call) alone. I might dump everything on Monday just to be fully relaxed, but you know, I’m not afraid if it starts rallying up again. Remember the kids in the roller coaster? :)