Sep 30 – October M3 Trade Update

What a difference a day makes. This “up” day has seen a decrease in volatility that has brought the trade values up quite a bit. Maybe 1% off of our trade highs. I have to do a bit of upside adjustments to get the T+0 line flatter on the upside but it won’t affect theta and will only modestly affect downside risks but it’s something we have to do in case the market runs off into the 1100s again. I also started closing down some Bearish butterflies for 15% profit given we’re 15 days to expiry. I’ll slowly be taking risk off here. I’ll probably roll up some of the 3rd standard deviation puts to take risk off on the downside. (If you can roll a put that’s 60c to $1 and it takes off 5-10k of risk, do it). If you’re worried about the costs, sell one or two butterflies to make up for it.

Oct M3 (2nd Update)

Ok. Wasn’t as bad as I thought. According to optionvue the trades are at about half of what they were last week (so it appears to be about ~2% up) for the month across the board. Theta is kicked in full throttle being 16 DTE so we might just be able to eek out a 5-7% result by next week. We’ll see.

Sep 29 (Oct M3 Trades)

I got all the adjustments in to get these things under control after the 9-10% fall from last week. They’re all mostly still up some cash (as of 2pm) and they have potential to make some more but we’ll need some market cooperation.

Edit: Ah, yeah another 15 point fall to end the day 🙁 From the speed of these falls, It would appear the world is ending sometime soon? No idea if the trades will be up money right now. This month has been a never ending struggle and will continue to be but our Theta is strong and if we can get just an ounce of calm or a bounce to reduce the volatility we should be OK. Right now though, we’re not moving from where we were.

I am not into managing these trades into expiry and I am looking forward to farther out trades. This market is nuts right now.

Nov (M3) Update

I’ve decided to buy half a unit of Nov 1060 BFs (adding to the trades capital). I don’t have a rule in plan against adding capital to a trade so long as the risk graph and profiles are good. Since we’re so far out, I think it makes sense here.

The trade for Nov is going good despite the 4-5% fall since we started. IF we go much below 1075, I’ll be closing the 1110s and adding some 1050s

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Oct M3 (Update)

The October M3s got crushed today. The little bit of catch-up we had since Aug 24 has been brought back down for the time being. To give an idea, on Sep 21st, the trades were up about 4% and now they’re up about 1% ish.

I mean, given that this occurred about 17 DTE (close to expiry) and we moved nearly 100 points (9%) in 6 trading days. I guess it’s not a bad result. It’s just frustrating as I had made some headway with the Aug 24 crash that drew me down and the protector is doing awful during the last few weeks.

I think I have to move to farther out M3s and close ’em before 21 DTE as I’ve mentioned before.

As for what we can hope for re the Oct trades, well, managed well, we can close them at target but it’ll take some market cooperation. It was a pretty bad day but I adjusted well I think. However, I do have some upside gamma trend issues if a bounce is >2% which I need to fix tomorrow.

Trade Plan – Sep 28 (October Trades)

The RUT is at the August 24 lows (1098-1100) and SPX is at 1894 right now. That was a nice 9% drop from its Friday high. The OCT trades are still profitable though despite the drop. However, at this moment, they aren’t as profitable as they were and our catch-up from the Aug 24 fall is now stunted a bit. I mean, the volatility is packed in there thus reducing the price of the BFs and we’ve had to make several adjustments. Some of which were on the upside early last week and of course, I’ve obviously had to adjust on the way down towards the end of the week. Likewise, today I had to adjust pre 2:30pm because all of our delta limits were exceeded by a large amount. I did most of the adjusting on a little bounce to 1106/1107 where I sold a bunch of 1150 BFs and added in place a bunch of 1080 BFs. That should hold until we get to the planned adjustment point at 2:30. Looks like we’ll have to move around a lot of things. I don’t love the positions right now while we sit on a major area for RUT (previous lows) and having the volatility be so high. Who knows, if things go our way, they can still do good for a close probably sometime next week.

It looks like ES (SPX futures) will test the 1875 double bottom. We’re extremely oversold on most indicators so it should test and bounce but who knows.

The November trades are all doing great. They’re all up $.

As I get out of Oct trades and as things stabilize, I am looking to do more long term capital efficient M3 (double sized with same risk potential) but starting them 65 days out and closing before 21 days to expiration. The double sized aspect will offset the closing of the trades before 21 DTE where you’d expect a lower profit potential. A few guys I’ve seen, trade the M3s further out and close them before 21 DTE but they accept a lower profit target. They have very little stress as gamma is quite tame and it requires a lot less adjustments that far from expiration. My thoughts is to make up for the profit potential by doing a capital efficient double sized M3. Again. the double sized M3 still has the same total risk level as a normal

The protector alpha is not doing great right now. It’s had some correlation issues these past few weeks but that should fix itself over time. The stocks have still done better overall than RSP.

Sep 24 -October trades 

Did my adjustments at 2:30pm-3pm and felt good going into the weekend until  into the close and after hours where the RUT is taking a nose dive dip.  It’s down about 20 points on the day. We’ve got another 25-30 points of downside room on the October trades before we have bigger issues and I am concerned with this right now.

The RUT has been erratic today and that’s causing me issues.  Hoping for a somewhat tame or up open for Monday.  The Rut was at 1195 a week ago and now it’s in the 1110’s and though I’ve adjusted appropriately and according to plan. I still can have some gamma issues on Monday if it’s a big gap down.

The November trade has not changed and is sitting perfectly for any pull back.

Sep 25- M3 Trade

No adjustments needed today. We’re slightly delta negative which is where I’d like to be as it gives cushion in a market fall re increased volatility. Since we’re a vega negative trade, any increased volatility hurts the trade. We’ll adjust on the upside once delta reaches -500 within the tent and -350 or so outside of the tent. As the market goes up, volatility tends to drop, and this will cause a sag in the T+0 line on the right hand side of the graph. We want to monitor this and usually we’ll add put credit spreads ATM to address and eventually, if it sits for a few days outside of the tent to the upside, we’ll roll the butterflies forward.

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