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.
Tuesday, September 29, 2009
09/29 Daily Summary
Today's consolidation was a nice gift! I appreciate that! Looking forward to a few more days just like it.. I fixed Yesterday's mistake I had made on the RUT position and Today its P&L started opening up. Both trades are progressing along nicely.
Position's Details:
09/29 RUT Iron Butterfly
09/29 MNX Iron Butterfly
Position's Details:
09/29 RUT Iron Butterfly
09/29 MNX Iron Butterfly
09/29 RUT Iron Butterfly
Yesterday I made a mistake, Today, rather than feeling sorry for myself, I went in there and fixed it! I sold both the extra NOV Put and Call I had in the portfolio, this provided me with the same delta exposure, but a lot more theta to work with. Because I did it early in the morning, I was able to capture most of that daily theta by end of Day. It also helped that the market didn't move much Today!
09/29 MNX Iron Butterfly
Position is progressing nicely! Notice the up-trend in the P&L chart, that is always nice to have! Theta is good, gamma and delta under control, looking forward to a few extra days of quiet market action.
Monday, September 28, 2009
09/28 Daily Summary
I must add the following check-list to use for end-of-day adjustment AND contingent order placement:
a) Check for long PUT or CALL that can be sold to cut deltas
b) Check for any delta hogs that need to be rolled to cut deltas
c) Add long PUT or CALL to cut delta
Last week, when I created my contingent orders, I didn't add an order to sell the long Nov PUT for the RUT position, this was a mistake on my part that I only caught up with Today while documenting the position. Add that to the MNX oversigh, thats two strikes on the same topic. Hence the need for the checklist.
Position's Details:
09/28 RUT Iron Butterfly
09/28 MNX Iron Butterfly
a) Check for long PUT or CALL that can be sold to cut deltas
b) Check for any delta hogs that need to be rolled to cut deltas
c) Add long PUT or CALL to cut delta
Last week, when I created my contingent orders, I didn't add an order to sell the long Nov PUT for the RUT position, this was a mistake on my part that I only caught up with Today while documenting the position. Add that to the MNX oversigh, thats two strikes on the same topic. Hence the need for the checklist.
Position's Details:
09/28 RUT Iron Butterfly
09/28 MNX Iron Butterfly
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