HUH's crash and burn trading thread

We're still just moving sideways here. We keep hitting a low in the 390-400 range and the highs on RUT are falling which means a resolution is coming. I decided to go ahead and adjust my mar 490/480 put by selling the 490/480 and buying the mar 400/390 so now

bot mar 490/480 put/short mar 48 iwm put@ cost of $183.06
becomes
bot mar 400/390 put/short mar 48 iwm put @ credit of $307.22

We're seesawing on a pretty important level so we should be getting a pretty significant move. My downside target would be the 370-375 target range and the upside would be a retest of the 420-430 level.
 
Kind of an odd day today. The morning opened with the S&P getting crushed but the RUT barely put in a low of 386 which was barely a 5 pt move down. So far the RUT is outperforming the S&P which is a concern. S&P has closed below the Nov intraday lows but the RUT is still way above the intraday lows and the Nasdaq is still above. So either RUT and Naz are leading meaning S&P should rally higher on a bigger % move than the RUT and Naz or we are in for a pretty sharp decline on the RUT and Naz as S&P heads lower towards 725 and possibly 700 before a ST reversal. Including today we've had 5 straight days where the RUT has set a daily low in the 390-400 range and every single day we got a lower high including today which just is not a good sign. The only saving grace is that we are oversold again on the short term so a massive downside move to 350 might not occur until we either get a relief rally or spend a few more days consolidating around the 370-400 range.

Consolidation or a sharp move to 430 would be my preference but lets see what the market serves up. Today I just did another swap out of selling one of my Jun 410/420 call positions and opening a may 360/370 call position. Here is are the trades:

Closed Position:
bot jun 410/420 call/short junQ 42 iwm call profit of $131.58

New Open position:
bot may 360/370 call/short may 37 iwm call @ cost of $193.34
 
The blood letting continues as RUT closed just below my downside target of 370-375 today. My assumption was that we would see at least a short term reversal at S&P 700 led mostly by bears taking profit. We hit that level today so the probability favors a relief rally back up to retest that 390-400 level. I'm essentially betting on seeing a retest of 390-400 before we can break 350 on RUT. On the downside, my portfolio really starts to incur significant losses upon a break of 350 so I am carefully watching this level but I am still favoring a test of the 390-400 level before that happens. If it does happen then I will take the opportunity to exit some march positions.

Even though I am expecting a rally from this level I must still take some steps to try and minimize downside losses. So I did the following today:

Did a swap out by closing:
bot jun 410/420 call/short junQ 42 iwm call@ cost of $48.36
which resulted in a profit of $88.58.
I opened
bot jun 360/370 call/short junQ 37 iwm call @ cost of $118.34

I also sold the 380/390 jun call spread so the position:
bot jun 380/390 call/short junQ 39 iwm call@ cost of $58.11
becomes
short junQ 39 iwm call @ credit of $394.53

Finally I sold one of my 410/400 jun RUT spreads and bought the jun 380/370 spread so the postion:
bot jun 410/400 put/short junQ 49 iwm put@ credit of $391.52
becomes:
bot jun 380/370 put/short junQ 49 iwm put@ credit of $506.8

The reason I chose to adjust the 410/400 Jun rather than the 480/470 mar position is because I am expecting a short covering rally even if its for 1 day, to take us back to the 380/390 range. If this happens then lets take a look at my main thorn in my side right now:

short mar 42 iwm call @credit of $254.10
bot mar 480/470 put/short mar 47 iwm put@ cost of $133.06
bot mar 400/390 put/short mar 48 iwm put@ credit of $307.22

If we get a rally to the 380-390 level I can go ahead and close: short 42 call for about $40 which means that position closes for about a $214 profit

The breakeven on that 480/470 is $1000 (480/470 put) - 133.06 (original cost of position) = $866.94. This means that I would have to close my short mar 47iwm put for more than 866.94 before I take a loss. This corresponds to 47-8.67 = 38.33. That means that if IWM rallies above 38.33 then my mar 480/470 position above will (believe it or not) still produce a profit. That only leaves the remaining 400/390 put/short mar 48 iwm position to worry about. The breakevens are the following:

upside: if IWM is above 44.93 this is profitable (48 - 3.07 = 44.93)

If RUT/IWM is roughly in the range of RUT 350-394. So losses will incur on this position if we close march below 350 and above 394. If we go above 394 then the loss produced by this position will be quite small because the other 2 march positions will be profitable. The losses could get bigger below RUT 350 assuming I don't do any other adjustments. I like the profit zone on this position so I am leaving it alone for now. Anyway, here is the current portfolio holdings:

CLOSED POSITIONS
bot jun 420/430 call/short junQ 43 iwm call@ profit of $118.38
bot jun 420/430 call/short junQ 43 iwm call@ cost of $91.88
bot jun 410/420 call/short junQ 42 iwm call profit of $131.58
bot jun 410/420 call/short junQ 42 iwm call@ cost of $88.58

short mar 42 iwm call @credit of $254.10
bot mar 480/470 put/short mar 47 iwm put@ cost of $133.06
bot mar 400/390 put/short mar 48 iwm put @ credit of $307.22
bot may 370/380 call/short may 38 iwm call@ cost of $168.06
bot may 370/380 call/short may 38 iwm call@ cost of $188.06
bot may 360/370 call/short may 37 iwm call @ cost of $193.34
bot jun 480/470 put/short junQ 47 iwm put@ credit of $56.89
bot jun 380/370 put/short junQ 49 iwm put@ credit of $506.80
bot jun 410/400 put/short junQ 49 iwm put@ credit of $327.77
bot jun 480/470 put/short junQ 47 iwm put@ credit of $16.49
short junQ 39 iwm call@ credit of $394.53
bot jun 360/370 call/short junQ 37 iwm call @ cost of $118.34
 
Not much to do other than wait at this point. I did go ahead and open a may put position today. Next few days should be key because I am still expecting a move to around 390 before taking a shot at breaking 350.

I added:
bot may 400/390 put/short 39 iwm put @ cost of $188.06
 
Well I sure called that wrong. We tested 350 BEFORE 390! :mad:

The good thing is that even though I was thinking massive rally I at least took some precautions and did some adjustments to protect my downside. We're at a pretty key level here so the looooong overdue bounce would be nice right about now! This is precisely one of the reasons why I decided to open this journal. When I think to myself "WHAT THE HELL WAS I THINKING" I can simply look back at this journal :)

Anyway, I didn't do too much today because I"m still looking for that darn bounce. You can only stretch a rubberband so far in a straight line.....

So I went ahead and closed
short mar 42 iwm call @ profit of $244.92
There was virtually no premium left in the 42 iwm call so didn't really see a need to leave it hanging out there for a couple bucks.

I also added
bot jun 330/340 call/short junQ 34 iwm call @ cost of $120.06
 
We're still teetering at the 350 level. Its a pretty important level for me so I am watching it closely. I went ahead and opened a couple of positions today:

bot jun 320/330 call/short 33 junQ iwm call @ cost of $153.51
bot jun 350/340 put @ cost of $492.36

As before, the 350/340 jun put is basically a little bit of downside protection at the moment because I wanted to adjust my jun 410/400/short junQ 49 iwm put position. However the jun 410/400 position isn't selling for what I want so I am going to wait until I get my price or better to sell it. Here is a list for the current open and closed positions:

CLOSED POSITIONS
short mar 42 iwm call @ profit of $244.92
bot jun 420/430 call/short junQ 43 iwm call@ profit of $118.38
bot jun 420/430 call/short junQ 43 iwm call@ profit of $91.88
bot jun 410/420 call/short junQ 42 iwm call@ profit of $131.58
bot jun 410/420 call/short junQ 42 iwm call@ profit of $88.58


OPEN POSITIONS
bot mar 480/470 put/short mar 47 iwm put@ cost of $133.06
bot mar 400/390 put/short mar 48 iwm put @ credit of $307.22
bot may 370/380 call/short may 38 iwm call@ cost of $168.06
bot may 370/380 call/short may 38 iwm call@ cost of $188.06
bot may 360/370 call/short may 37 iwm call @ cost of $193.34
bot may 400/390 put/short 39 iwm put @ cost of $188.06
bot jun 480/470 put/short junQ 47 iwm put@ credit of $56.89
bot jun 380/370 put/short junQ 49 iwm put@ credit of $506.80
bot jun 410/400 put/short junQ 49 iwm put@ credit of $327.77
bot jun 480/470 put/short junQ 47 iwm put@ credit of $16.49
bot jun 330/340 call/short junQ 34 iwm call @ cost of $120.06
short junQ 39 iwm call@ credit of $394.53
bot jun 360/370 call/short junQ 37 iwm call @ cost of $118.34
bot jun 320/330 call/short 33 junQ iwm call @ cost of $153.51
bot jun 350/340 put @ cost of $492.36

Have a good weekend!
 
Quote from valpak:

If you make money out of this cycle, it would be a real test to your strategy.
More...

I'm still about 50% confident that I can be profitable this cycle. Not sure if it'll be significant profit! Good thing is still have 9 trading days left and I just need a small bounce. Next thing to watch is thursday congress will discuss relaxing the Mark to Market rule which might get some bears to start covering some shorts before the meeting which might be enough of a bounce to get out.

Otherwise the next S&P obsession level seems to be wanting to head to 650. May just be a case of we drop until we get a print of 649.95 and then rally back to 700 which should be enough to cause a move on RUT to get out profitably in March.

We'll see :confused:
 
Why aren't you adjusting one march and two june 470/480 put positions by closing in the money spread and move it further? Waiting for the right price?
 
Quote from valpak:

Why aren't you adjusting one march and two june 470/480 put positions by closing in the money spread and move it further? Waiting for the right price?
More...

I refrained from adjusting those positions right now because I didn't want to end up overtrading in an oversold market. I was waiting for the market bounce so I could gauge the market reaction and see if can spot a new trading range. Once I establish what I THINK is the new range then I can make decisions on if I want to do more adjusting. (remember I've already adjusted the 500/490/49iwm put positions a couple of times).

Plus for the march 480/470 put position I had done a little bit of hedging by adjusting to the
short mar 42 iwm call @credit of $254.10. Since I can't loose on both the 42 call position and the mar 480/470/47 iwm position at the sametime I decided to let it run. Sure enough we dropped, I was able to cover the 42 call for about $244 in profit which gives me additional breathing room for the mar 480/470 position to drop.

Then looking at June I've got a
bot jun 480/470 put/short junQ 47 iwm put which can be paired/hedged with
short junQ 39 iwm call@ credit of $394.53
This is particularly interesting because if we close june between 39 and 47 on IWM I would still make a profit of $537.94. If we close below 39 then the breakeven for the paired positions would be down to IWM $33.66 without me doing any additional adjusting to these positions. The other potential problem is if we get a strong rally and go above 480 on the RUT by June in which case I would do some adjustment there.

Finally I just have the 3rd jun 480/470/47iwm put position. Again I'm holding off doing anything aggressive with it because I was waiting for the bounce.

So the shorter simpler answer would be I had decided to use calls as a hedge for 2 of the positions and let the 3rd one run because of 2 factors:

1) I was expecting a bounce
2) The june positions have a lot of time left till expiration and I think we will get a chance to either exit profitably or adjust them after the markets oversold condition has been relieved.

When I'm doing some analysis I try to pair up legs to determine "if this happens do I have something else that will at least benefit a little bit." So typically you'll notice that I try to keep roughly the same amount of puts and calls even though they might differ in expiration.

I also added the following put position today:
bot jun 390/380 put/short junQ 38 iwm put @ cost of $113.34
 
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