The market is going to open down slightly today at some major ES supports (1910-1915) with more support at 1898/1900. If we have a close below 1898, then we can expect a retest of the lows at 1880. If it can get above 1915, then I expect a retest of the 1940/1950 level. Yellen speaks today at 5pm EST and likely the market is going to putter around until then. I’ve got some adjustments to do today on the M3s for October and I’ll be looking to enter November trades.
The protector is down about 1.9% now vs SPY down about 6.2%. The protector lost a lot of value from Sep 8 till present due to the volatility collapse coming out of the long puts. The hedge part of the trade was what caused this loss. During the week of the correction, the protector was actually up about 1% due to the volatility in the longs. It did what it was supposed to do but the weeks following, as the fear leaves, the hedge starts to normalize and we experience some of that initial hedge gain dissipate. This is what is happening now.
The options trades have gained well during the past two weeks and we’re starting to go risk on today and tomorrow which might be good timing with this increased volatility.