HUH's crash and burn trading thread
- Thread starter huh
- Start date
We got a nice pullback today and now it looks a little blurry. The RUT held the 50 day support which is a win, but the other indexes broke their support levels so now the question is that is RUT lagging or is it still leading. Either way I was looking to close jan positions out before friday and said I would if we pulled back to the 500 level which we did. I went ahead and closed the following positions:
bot jan 480/470 put/short jan 47 iwm put@ cost of $68.51
bot jan 440/450 call/short jan 45 iwm call@ cost of $208.54
I did a horrible job of timing my put position exit so the price I got was atrocious compared to what it could have been at the end of the day but a gain is a gain. I received $124.64 for the put position and then I received $406.91 for the call position. Here is the current list:
Closed positions:
bot jan 470/460 put/short jan 46 iwm put with profit $43.88
bot jan 480/470 put/short jan 47 iwm put with profit $56.13
bot jan 420/430 call/short jan 43 iwm call with profit $59.88
bot jan 440/450 call/short jan 45 iwm call with profit $198.40
Open positions
short jan 45/41 put vertical@ credit of $50.94
bot jan 500/490 put/short jan 49 iwm put@ cost of $53.82
bot jan 490/500 call/short jan 41 iwm call@ credit of $257.94
bot feb 450/460 call/short feb 46 iwm call@ cost of $77.06
bot feb 520/510 put/short feb 51 iwm put@ cost of $42.06
bot feb 450/460 call/short feb 46 iwm call@ cost of $148.06
bot feb 440/450 call/short feb 45 iwm call@ cost of $137.06
bot feb 500/490 put/short feb 50 iwm put@ cost of $112.06
bot feb 440/450 call/short feb 45 iwm call@ cost of $163.54
bot feb 510/500 put/short feb 50 iwm put@ cost of $128.06
bot feb 520/510 put/short feb 51 iwm put@ cost of $147.06
bot feb 530/520 put/short feb 52 iwm put@ cost of $172.06
bot feb 540/530 put/short feb 53 iwm put@ cost of $118.06
bot feb 540/530 put/short feb 53 iwm put@ cost of $197.06
bot mar 480/490 call/short marQ 49 iwm call @cost of $128.06
marQ means that I had to hedge with a quarterly IWM position because the regular march iwm have not been opened for trade yet.
bot jan 480/470 put/short jan 47 iwm put@ cost of $68.51
bot jan 440/450 call/short jan 45 iwm call@ cost of $208.54
I did a horrible job of timing my put position exit so the price I got was atrocious compared to what it could have been at the end of the day but a gain is a gain. I received $124.64 for the put position and then I received $406.91 for the call position. Here is the current list:
Closed positions:
bot jan 470/460 put/short jan 46 iwm put with profit $43.88
bot jan 480/470 put/short jan 47 iwm put with profit $56.13
bot jan 420/430 call/short jan 43 iwm call with profit $59.88
bot jan 440/450 call/short jan 45 iwm call with profit $198.40
Open positions
short jan 45/41 put vertical@ credit of $50.94
bot jan 500/490 put/short jan 49 iwm put@ cost of $53.82
bot jan 490/500 call/short jan 41 iwm call@ credit of $257.94
bot feb 450/460 call/short feb 46 iwm call@ cost of $77.06
bot feb 520/510 put/short feb 51 iwm put@ cost of $42.06
bot feb 450/460 call/short feb 46 iwm call@ cost of $148.06
bot feb 440/450 call/short feb 45 iwm call@ cost of $137.06
bot feb 500/490 put/short feb 50 iwm put@ cost of $112.06
bot feb 440/450 call/short feb 45 iwm call@ cost of $163.54
bot feb 510/500 put/short feb 50 iwm put@ cost of $128.06
bot feb 520/510 put/short feb 51 iwm put@ cost of $147.06
bot feb 530/520 put/short feb 52 iwm put@ cost of $172.06
bot feb 540/530 put/short feb 53 iwm put@ cost of $118.06
bot feb 540/530 put/short feb 53 iwm put@ cost of $197.06
bot mar 480/490 call/short marQ 49 iwm call @cost of $128.06
marQ means that I had to hedge with a quarterly IWM position because the regular march iwm have not been opened for trade yet.
I can see that if the RUT/IWM is contained within certain range, good money for you. You just created position for the month of March and that made me thinking that basically you are selling hedge so that you get to eat on time premium of hedge as long as index stays withing a profit zone. What could be the other reason going so far out the month?
Yes thats correct. The hedge is there to offset the cost of purchasing the ITM RUT spread. Time premium works in the opposite way when these positions are put on. The ITM RUT spread is gaining time premium as long as its stays in the money while the IWM hedge is constantly losing time premium so its a good combo. The danger is of course if the market runs too far and the hedge begins to become a problem, but I've found that having the market turn against me with more than a month left to go is easier to adjust.
The reason being its cheaper to buy an ITM RUT spread that has 2 months till expiration instead of just one. So I'm not too concerned when one of my hedges moves too much into the money on a position that has over a month to go, I have to be more aggressive for the ones that have less than a month to go. Plus the cost difference of buying an ITM RUT with 2 months to go versus just 1 month and the amount of premium collected for selling the hedge for 2 months out versus 1 month makes it more appealing. So typically I'll start buying new positions with somewhere around 6-10 weeks before expiration.
Arrrgh so here is a perfect example of how real life and paper trading differ. So one of the main reasons I've been wanting to close everything out is that I'm taking the family on a week long vacation next week with probably limited to no access to the market. And the biggest scam in wallstreet (in my opinion yes even bigger than Maddoff) occurs on the third friday of every month at the open more commonly known as option cash settlement. The thought of not being able to have control of my expiring positions on option expiration week especially on thursday before the monthly screw job just scared the crap out of me. So I've ended up having to make a lot of choices in closing positions that I don't want to for the sake of being able to enjoy my vacation 
The SUCK IT position worked beautifully for january as there was very little need for major adjustments. However, as I mentioned I"m having to close everything and making a small gain rather than a shot at a much bigger gain next week. Here are the closures I did:
-bought back the short jan 45/41 iwm put vertical for $28.30
-bought back the short jan 49 iwm put for $165.70
-bought back the short jan 41 iwm call for $736.18
Buying back the 49 put and 41 call essentially locks my box spread at 490/500 at a cost of $697.76 but regardless of where RUT settles next friday, the box will pay $1000 resulting in a profit of $302.24. I'm upset at having to close this box today for $302.24 because I could have waited and squeezed about another $75 - $100 of premium out of this if I was around to manage it but oh well. If I do find some screen time next week then I may play around with unlocking the box by closing one side if the market makes a definite breakdown or breakout. Anyway, as of now here are the profit results from the jan positions:
Closed positions:
bot jan 470/460 put/short jan 46 iwm put with profit $43.88
bot jan 480/470 put/short jan 47 iwm put with profit $56.13
bot jan 420/430 call/short jan 43 iwm call with profit $59.88
bot jan 440/450 call/short jan 45 iwm call with profit $198.40
short jan 45/41 put vertical with profit $22.64
bot jan 490/500 box spread for $697.76 which will create profit of (1000-697.76) = $302.24
The total return is $683.17. The margin requirement for these positions was only about $8000, however since I am putting 30K towards SUCK IT I am going to use the entire 30K to calculate the return even though most of it sat around doing nothing. So the return for the jan positions is:
(683.17/30000) = .0227 so its 2.27%. I need another 27.73% to reach my target goal of 30% return.
I've also added another march position today.
Open positions
bot feb 450/460 call/short feb 46 iwm call@ cost of $77.06
bot feb 520/510 put/short feb 51 iwm put@ cost of $42.06
bot feb 450/460 call/short feb 46 iwm call@ cost of $148.06
bot feb 440/450 call/short feb 45 iwm call@ cost of $137.06
bot feb 500/490 put/short feb 50 iwm put@ cost of $112.06
bot feb 440/450 call/short feb 45 iwm call@ cost of $163.54
bot feb 510/500 put/short feb 50 iwm put@ cost of $128.06
bot feb 520/510 put/short feb 51 iwm put@ cost of $147.06
bot feb 530/520 put/short feb 52 iwm put@ cost of $172.06
bot feb 540/530 put/short feb 53 iwm put@ cost of $118.06
bot feb 540/530 put/short feb 53 iwm put@ cost of $197.06
bot mar 480/490 call/short marQ 49 iwm call @cost of $128.06
bot mar 460/470 call/short marQ 47 iwm call @cost of $118.06
The SUCK IT position worked beautifully for january as there was very little need for major adjustments. However, as I mentioned I"m having to close everything and making a small gain rather than a shot at a much bigger gain next week. Here are the closures I did:
-bought back the short jan 45/41 iwm put vertical for $28.30
-bought back the short jan 49 iwm put for $165.70
-bought back the short jan 41 iwm call for $736.18
Buying back the 49 put and 41 call essentially locks my box spread at 490/500 at a cost of $697.76 but regardless of where RUT settles next friday, the box will pay $1000 resulting in a profit of $302.24. I'm upset at having to close this box today for $302.24 because I could have waited and squeezed about another $75 - $100 of premium out of this if I was around to manage it but oh well. If I do find some screen time next week then I may play around with unlocking the box by closing one side if the market makes a definite breakdown or breakout. Anyway, as of now here are the profit results from the jan positions:
Closed positions:
bot jan 470/460 put/short jan 46 iwm put with profit $43.88
bot jan 480/470 put/short jan 47 iwm put with profit $56.13
bot jan 420/430 call/short jan 43 iwm call with profit $59.88
bot jan 440/450 call/short jan 45 iwm call with profit $198.40
short jan 45/41 put vertical with profit $22.64
bot jan 490/500 box spread for $697.76 which will create profit of (1000-697.76) = $302.24
The total return is $683.17. The margin requirement for these positions was only about $8000, however since I am putting 30K towards SUCK IT I am going to use the entire 30K to calculate the return even though most of it sat around doing nothing. So the return for the jan positions is:
(683.17/30000) = .0227 so its 2.27%. I need another 27.73% to reach my target goal of 30% return.
I've also added another march position today.
Open positions
bot feb 450/460 call/short feb 46 iwm call@ cost of $77.06
bot feb 520/510 put/short feb 51 iwm put@ cost of $42.06
bot feb 450/460 call/short feb 46 iwm call@ cost of $148.06
bot feb 440/450 call/short feb 45 iwm call@ cost of $137.06
bot feb 500/490 put/short feb 50 iwm put@ cost of $112.06
bot feb 440/450 call/short feb 45 iwm call@ cost of $163.54
bot feb 510/500 put/short feb 50 iwm put@ cost of $128.06
bot feb 520/510 put/short feb 51 iwm put@ cost of $147.06
bot feb 530/520 put/short feb 52 iwm put@ cost of $172.06
bot feb 540/530 put/short feb 53 iwm put@ cost of $118.06
bot feb 540/530 put/short feb 53 iwm put@ cost of $197.06
bot mar 480/490 call/short marQ 49 iwm call @cost of $128.06
bot mar 460/470 call/short marQ 47 iwm call @cost of $118.06
Good grief, I go on vacation for 1 week and the bears run wild on wallstreet!
The good thing is that there is plenty of time left in my feb positions to let the market do its thing and wait for a good exit opportunity. It looks like we finally got a breakdown out of the consolidation pattern we've been in for weeks. 440 was a good support level which had been holding for weeks and today we closed below it. We'll have to see what happens over the next couple of days, if we don't rally above 440 in the next couple of days then it looks like a pretty quick move to retest the 370-400 range by the end of next week. Again the good thing is that this is occurring early on in the feb cycle so there's plenty of time for the market to tank, consolidate, and rally back up (hopefully towards the 450 area). On the other hand if we recover 440 in the next few days and this proves to be a false breakdown then we should be able to retest that 520 level in the next couple of weeks......and once again hopefully we rally and pullback down towards the 480 level.
Your guess is as good as mine and I'm just reacting to what is happening and what might happen. I made some adjustments and closed one position. I'll try not to mix things up too much to avoid some confusion but if anybody wants clarification let me know. Since the march options on IWM are now available to trade I am going to go ahead and close out my march quarterly positions. I closed one today and I will probably close the other one in the next couple of days.
Closed positions
mar 480/490 call/short marQ 49 iwm call @ profit of $44.60
Adjustments
bot feb 450/440 put spread@ cost of $472.36
bot feb 450/440 put spread@ cost of $532.36
sold feb 450/460 call spread @credit of $417.64
I bought the 450/440 put spreads to adjust against my 2 short 53 iwm puts. Typically I would have sold the 540/530 put spreads and used the proceeds to purchase the 450/440 spreads but my limit order to sell the 540/530 spreads has not filled yet so I am going to keep trying, so for now the 450/440 put spreads are just simply "insurance" positions for the entire portfolio until my order on the 540/530 spreads executes. I also sold one of my feb 450/460 spreads leaving a short 46 feb iwm call. This is quite a bit of adjustments to do at once but my screen time might be limited again this week on Wednesday and Friday so I am trying to take some precautions for what appears like a move down to retest the lows. At this point I'm not as concerned about a rally as I am about a sell off (although that could change tomorrow in this crazy..but fun market). I've also added 2 call positions for march.
Closed positions
mar 480/490 call/short marQ 49 iwm call @ profit of $44.60
short feb 46 iwm call@ credit of $340.58
bot feb 520/510 put/short feb 51 iwm put@ cost of $42.06
bot feb 450/460 call/short feb 46 iwm call@ cost of $148.06
bot feb 440/450 call/short feb 45 iwm call@ cost of $137.06
bot feb 500/490 put/short feb 50 iwm put@ cost of $112.06
bot feb 440/450 call/short feb 45 iwm call@ cost of $163.54
bot feb 510/500 put/short feb 50 iwm put@ cost of $128.06
bot feb 520/510 put/short feb 51 iwm put@ cost of $147.06
bot feb 530/520 put/short feb 52 iwm put@ cost of $172.06
bot feb 540/530 put/short feb 53 iwm put@ cost of $118.06
bot feb 540/530 put/short feb 53 iwm put@ cost of $197.06
bot feb 450/440 put spread@ cost of $472.36
bot feb 450/440 put spread@ cost of $532.36
bot mar 460/470 call/short marQ 47 iwm call @cost of $118.06
bot mar 420/430 call/short mar 43 iwm call@ cost of $153.06
bot mar 410/420 call/short mar 43 iwm call@ cost of $128.54
The good thing is that there is plenty of time left in my feb positions to let the market do its thing and wait for a good exit opportunity. It looks like we finally got a breakdown out of the consolidation pattern we've been in for weeks. 440 was a good support level which had been holding for weeks and today we closed below it. We'll have to see what happens over the next couple of days, if we don't rally above 440 in the next couple of days then it looks like a pretty quick move to retest the 370-400 range by the end of next week. Again the good thing is that this is occurring early on in the feb cycle so there's plenty of time for the market to tank, consolidate, and rally back up (hopefully towards the 450 area). On the other hand if we recover 440 in the next few days and this proves to be a false breakdown then we should be able to retest that 520 level in the next couple of weeks......and once again hopefully we rally and pullback down towards the 480 level.
Your guess is as good as mine and I'm just reacting to what is happening and what might happen. I made some adjustments and closed one position. I'll try not to mix things up too much to avoid some confusion but if anybody wants clarification let me know. Since the march options on IWM are now available to trade I am going to go ahead and close out my march quarterly positions. I closed one today and I will probably close the other one in the next couple of days.
Closed positions
mar 480/490 call/short marQ 49 iwm call @ profit of $44.60
Adjustments
bot feb 450/440 put spread@ cost of $472.36
bot feb 450/440 put spread@ cost of $532.36
sold feb 450/460 call spread @credit of $417.64
I bought the 450/440 put spreads to adjust against my 2 short 53 iwm puts. Typically I would have sold the 540/530 put spreads and used the proceeds to purchase the 450/440 spreads but my limit order to sell the 540/530 spreads has not filled yet so I am going to keep trying, so for now the 450/440 put spreads are just simply "insurance" positions for the entire portfolio until my order on the 540/530 spreads executes. I also sold one of my feb 450/460 spreads leaving a short 46 feb iwm call. This is quite a bit of adjustments to do at once but my screen time might be limited again this week on Wednesday and Friday so I am trying to take some precautions for what appears like a move down to retest the lows. At this point I'm not as concerned about a rally as I am about a sell off (although that could change tomorrow in this crazy..but fun market). I've also added 2 call positions for march.
Closed positions
mar 480/490 call/short marQ 49 iwm call @ profit of $44.60
short feb 46 iwm call@ credit of $340.58
bot feb 520/510 put/short feb 51 iwm put@ cost of $42.06
bot feb 450/460 call/short feb 46 iwm call@ cost of $148.06
bot feb 440/450 call/short feb 45 iwm call@ cost of $137.06
bot feb 500/490 put/short feb 50 iwm put@ cost of $112.06
bot feb 440/450 call/short feb 45 iwm call@ cost of $163.54
bot feb 510/500 put/short feb 50 iwm put@ cost of $128.06
bot feb 520/510 put/short feb 51 iwm put@ cost of $147.06
bot feb 530/520 put/short feb 52 iwm put@ cost of $172.06
bot feb 540/530 put/short feb 53 iwm put@ cost of $118.06
bot feb 540/530 put/short feb 53 iwm put@ cost of $197.06
bot feb 450/440 put spread@ cost of $472.36
bot feb 450/440 put spread@ cost of $532.36
bot mar 460/470 call/short marQ 47 iwm call @cost of $118.06
bot mar 420/430 call/short mar 43 iwm call@ cost of $153.06
bot mar 410/420 call/short mar 43 iwm call@ cost of $128.54