Nice down day....except for the DOW

Well the Russell 2000 the S&P 500 and the NASDAQ were down today, but that stubborn DOW just wants to go up. Good thing we are trading the RUT cause it went down over 7 points today.
I closed out the remaining May bear call spreads for .13 debit today, just so I don't have to worry about the news coming out this week or the settlement price on Friday.
I used to hold on so I didn't have to pay the commission or the small debit. Once the initial was in my account I tried to keep all of it. It took me a few times to learn my lesson but I was proud of myself today that I didn't try and talk myself out of it. A couple times in the past my trades were looking good on Monday expiration only to have it move quickly up that week and take out all of my profits. I only have a few days left it won't go up that fast and if it does I should be alright. NOPE. It can go up that fast and I don't want any should as part of my trading. I am now out and I don't have to worry about my May trades. The bull put spreads are almost 100 points away so I will let them expire.
Now I will monitor and defend the June trades if needed.

up up up down up up up...

Well with every down day of more than a couple points the next day keeps bouncing right back. I waited til the FED announcement on wed to see if we would have to adjust our may trades and also look to put a top side trade on. The announcement didn't bring much of anything. They didn't raise the rate as was expected yet they are still concerned about inflation and the weak housing market. Same stuff as six weeks ago, although this time the market move to the upside for the day but only by a little.
The May 860/870 trade is looking good. It is currently 34 points out of the money, has a delta of .05 and a probability of 93%. It currently shows a debit of .25 to close the trade. All is looking good. Lately expiration week has been bullish but I'm going to hold this trade over the weekend burning a little more time and put an order in for .10 to close the trade. It is nice to let options expire and not have to pay the small debit or commission. It is money well spent to not have any worries over the settlement price on Friday morning. Last month was a g00d example of the when the settlement price was around 11 points higher than the Thurs close.
I put on the last of our June trades yesterday. I had orders in on Wed but the market was running up after the announcement so I wanted to wait for a bit of a reversal. We got that yesterday. Although one day is not a significant reversal I put on the trade and am willing to defend it if need be.
The Trade : I put on the June bear call spread at 880/890 for a credit of .60. I could have gotten the same credit at 890/900 on Wed or almost 1.00 credit for the 880/890, but to me it was better to wait for a little reversal before putting on the trade.
Next week I'll look to close the May trades early and monitor the June ones.

Trade safe

Doesn't count

So we finally had a down day on the DOW. DOESN"T COUNT. For how long and how fast this market has moved up a down day of 3.90 isn't really a down day.

Well the RUT was looking perfect this morning down about 10 points. I decided to buy back a few contracts for .25 debit and decided to let the rest run over the FED announcement tomorrow. If it goes down more tomorrow we might be able to get out before the announcement, but doesn't look likely.

Technically speaking the RUT has a hammer with a LONG lower shadow today. The hammer last week on the RUT was followed the next day with a 12 point gainer. I would not be surprised to see the same thing tomorrow after the announcement, could easily be more than 12. Let's say that the RUT moves up 15 points tomorrow. That will leave us 15 points away on our short strike with 8 days til expiration. We should still be fine.

(Click to enlarge)

The 860/870 trade shows a delta of .08, a probability of 85% and a debit of .45
we look good on all accounts there. We are within 15 trading days so we want to stay at least 10 points away from our sold strike. Delta under .25 and a net debit less than $2.00

After tomorrow we will know if we will have to roll the May trades or not. We can also look for bear call spreads to put on for June.

Trade safe

24 out of 27

Well this is just crazy 24 out of the last 27 trading days the DOW has been positive. I might as well be like everyone else and say that it can't keep going on like this forever. I'm starting to think that just maybe it can. For those of us playing neutral strategies, this is not an ideal market. Good thing for us we are playing the RUT.
The good news...
The RUT was actually down 1.01 today. It's not much but we burned some more time and we'll take that.

The bad news...
Not much is slowing this market down and we only have one more day before the FED announcement saying that we are not raising rates. It doesn't matter what else is said because it won't be heard over the trample of the bulls on their way to 13500 on the DOW.

Lets see how our positions are holding up.

Our 860/870 has a delta of .09 which dropped from .13 on Fridays close. The probability is showing 85% and the debit is .55 to buy this back. All of this with 10 days til expiration, we're looking good. We would be if it weren't for that damn FED announcement on Wed. We all know what they're going to say, the same thing they've said the last few times, no new surprises. Yet the market is still going to shoot up on the announcement. Crazy, but that's how it is.
I would like to get out of the 860/870 position before the announcement, while still keeping as much money as possible. There is still a day for more time to burn off. I will monitor this position tomorrow and get out if I can.

Let's look at the worst case scenario. Even if it does shoot up wed we still have 28 points right now. Even if it does go up 15 points we will still be 13 points away with just over a week to go. It wouldn't be our ideal situation but we should be able to still get out of it.

The last thing I like going into tomorrow is that candle line. Check out the chart, today there was a long upper shadow that reach 835 just like two weeks ago. I'm thinking it won't break this tomorrow giving us a chance that we might be able to get out of this trade with not all of the profit we were looking for but still a pretty good one considering how fast the market has moved up lately.

(Click to enlarge)



Of course the chart won't mean anything by Wed after the FED announcement.

Trade safe

And yet again...oh never mind

Yep once again the markets were up. That makes it 23 out of the last 26 have been up for the DOW. The RUT hasn't that aggressive but it was up 4 points today. That puts our May 860/870 at a delta of .13 with a debit of .90 and a probability of 81%. It still hasn't past resistance at around 832. We'll watch to see if it does next week.
Our trade is still looking good, except...... for the fact that the FED announcement comes out on Wed. With the sluggish job report today the idea is that the FED won't raise interest rates and maybe later this year they will lower them. If they give any hint of that on Wed, you can be sure that the market will continue it's northern journey.
I'm hoping we won't have big moves early next week so I might be able to close down the 860/870 trade. With some time decay over the weekend and with only 13 trading days left maybe we can get out before the announcement on Wed afternoon. If it does run up we can look to roll the trade. The other option if we expect a big move up is to buy back the shorts and let our long strikes run up in value.
For June top side positions I will wait til after the FED announcement.

Trade safe

Up we go again and again...

Well the markets were back up today. the DOW reached all time highs AGAIN. The RUT is right back to where it was before the big drop on Monday. The good news is that we got filled on out June bull put spreads yesterday a couple points off the lows. We got filled on the June 730/720 bull puts for a .60 credit and now our short is 100 points away. I'll wait for a reversal on the top end before putting on a June bear call. I'll also wait til after the fed announcement next week.

Here is a list of our currents trades.

May

RUT 860/870 bear call current delta of .10
RUT 730/720 bull put current delta of .03

June

RUT 730/720 bull put

We are still looking good on our May trades, we'll just keep an eye on the 860 shorts and roll them if we need to.

Trade safe

Well needed rest for the Russell

Well the RUT finally took the rest it was needing. Down 15.13 today was just what we wanted for our May trades. Let's take a look.
The 860/870 shows a delta of .07 a probability of 89% and a debit of .45 to buy back.
The 730/720 shows a delta of .04 a probability of 99% and a debit of .30 to buy back.

With the RUT hanging around 830 we were burning time and the trades were looking good, but now with just 17 days to go these trades look great.

I had an order to sell the June 890/900 today but it wasn't filled as the market started going down fast. I will look for the RUT to hit support sometime this week and look to put on a bull put spread.

Here is a chart of the RUT with the big bearish candle today.

(Click to enlarge)

Trade safe.