My April trades don’t have that much more upside risk left. They’re all down @ about 5-5.5% on this record 15% move in 15 days. It’s actually a historic move and has broken a few records. A move to about 1100/1105 would bring another 1%/1.5% loss in the trade.
My plan is to add more theta to the trade and hedge the upside a bit with any pull back. I’ll do it in stages. If we get a touch in the 1070s, I’ll add some 1090 or 1100 call BWBs. If we get another touch in the 1060s, I’ll add more 1080 BWBs and so on. I won’t go too far out (probably 20 points above) and try beefing up the theta in the area and hoping for some decent pullback so we have a chance to break even or profit. If by Tuesday, there is no pullback, I’ll start figuring out how to deal with the theta and probably put on some 20 point out BWBs. A 5% pull back anytime in the next week would put us at a decent profit and allow us to re-adjust the trade or even just exit.
As someone posted in our skype group: All the way back to 1997, we have never had a move of this size without a single pull back. A similar pattern happened in 2013, we moved up 114 points on the QE business but that was as close as was found,and right now we’re up about 145 points. Truly a historic move. The RUT RSI is epic @ 91 and all indicators related are as extreme as you can get. The NYMO is now at 350. The all-time record is 375.
My trades are all down about 5% (15% w/ leverage). I expect an occasional 5% loss. Not worried about that. I am a bit frustrated and kinda demotivated by the challenges of the last 6 months. Starting in August, it’s been a silly environment that’s challenged me at every stop. From the Aug 24 crash, to the subsequent V reversal in October to the 22% fall from Dec 31 till Feb 11 and now I am dealing with a 15% straight rise (without break or consolidation). These challenges and dealing with larger money can suck the life out of you at times but to be fair, it’s been quite extreme environments that should train me to be a more astute trader. I am now looking over my plans to see if I faltered in how I managed the trades. I don’t know. I mean, I did use some technicals to my disadvantage and I guess around 1040 I would have added bit more upside hedges but nothing substantial was warranted. My play by play is that I was at -25 delta when Rut was at 1035. I added some BWBs and calendars, when it touched the 1040 area bringing it back down to the 22-25 delta area. I was satisfied, but then the last 15 minutes, we had a move to 1053 and my delta moved right to -25 delta again. The next day, I was convinced we were about as overbought as we could get and since I was hovering around the limits, I decided to wait for a pullback. The next day I got a little move down and put on a few more upside adjustments, again not much (enough?), RUT moved up again in the last 15-20 minutes to 1063 area. Super overbought. I haven’t really touched it since (a few additions). Now we’re at 1087 and down 5/6% with not a whole lot of upside risk left. Is my plan on waiting for some decent pull-back wrong or am I deer-in-headlights’ing it?? I think the odds of another sustained run is low and the odds of a decent pull-back eventually in the next 5 days is high. Without that much upside risk left, I believe the best is to wait. I mean we are at insane extremes. I continue to be patient as I was during the fall. Maybe this time it catches up with me.
I may even add some bearish butterflies if we touch 1090 🙂