HUH's crash and burn trading thread

Once again we're sitting in the middle of the seesaw. We've had 3 days in a row where we've had lower lows and lower highs and we've been closing in a pretty tight range around 580-585. So as usual, low volatility is followed by high volatility so I suspect we'll get a break above 585 up to 600 or a break down to 565 in the next couple of days. Normally I would be biased towards a break down to 565 with the continual lower lows and lower highs, but this time around I have no clue.

Bear case
-We're a bit overbought.
-We're approaching the bottom range of the 1050-1100 year end prediction by goldman, so unless they turn around and magically raise their guidance to 1150 to 1200 once we get to 1050, I think we'll see profit taking begin. I do expect Goldenbuttcrack to raise their guidance but would think they'd wait until we get some 3rd quarter earnings and a better sense of how positive the 3rd quarter GDP is going to be.
-We've also gotten decent economic news yet the market hasn't really rallied on it which is a bearish sign.

Bull case
-Its a freaking bull market! DUH! :)
-We sold off to the 10day today and bounced right up which is very bullish.
-Still a lot of long only loser funds chasing performance putting in an artificial floor. I looked at our POS 401K fund choices and more than half of the garbage offered is underperforming the spy....brain drain on wallstreet...riiiiiiight....not sure how you drain something that isn't there.....

Anyway today I decided to take advantage of the selloff in the morning to open the following:
sold 60 sep iwm put @ credit of $277
sold 60 sep iwm put @ credit of $320.25
sold 60 sep iwm put @ credit of $262
bot sep 530/540 call @ cost of $907
 
On friday I added the following position:
sold 60 sep iwm put @ credit of $224

I currently have the following positions open:
short 100 shares iwm @ credit of $4447.29
short 100 shares iwm @ credit of $4893.16
short 100 shares iwm @ credit of $4436.88
short 100 shares iwm @ credit of $4900.63
short 100 shares iwm @ credit of $5005.44
short 100 shares iwm @ credit of $4942.23
bot sept 570/580 call @ cost of $592
bot sep 530/540 call @ cost of $907
sold 60 sep iwm put @ credit of $261
sold 60 sep iwm put @ credit of $247
sold 60 sep iwm put @ credit of $277
sold 60 sep iwm put @ credit of $320.25
sold 60 sep iwm put @ credit of $262
sold 60 sep iwm put @ credit of $224
 
With your short being way out of reach, I am trying to figure out your game plan. You can't be short very long time yet you have a long way to go before you can catch up. You are tying to catch up by selling 60 puts and if you are hoping that they expire worthless, your gap keeps getting wider and wider. I just can't figure out what you are tying to do.
 
Quote from valpak:

With your short being way out of reach, I am trying to figure out your game plan. You can't be short very long time yet you have a long way to go before you can catch up. You are tying to catch up by selling 60 puts and if you are hoping that they expire worthless, your gap keeps getting wider and wider. I just can't figure out what you are tying to do.
More...

Its actually the opposite. I'm selling puts to try and catch up by selling puts that I DON'T expect to expire worthless. Lets take a look at the following:

On August 24th iwm opened at $58.40 so my loss on the following postion is:
short 100 shares iwm @ credit of $4447.29
5840 - 4447.29 = loss of $1392.71 and the losses go higher as the iwm goes higher.

I opened the following position:
sold 60 sep iwm put @ credit of $261

So now lets assume that iwm ends the cycle at 55, then I'd have the following:
short 100 shares iwm @ loss of (4447.29-5500) = -$1052.71
sold 60 sep iwm put @ loss of (5500 - 6000 + 261) = -$239
So as long as iwm expires under 60 my total loss is going to be $1052.71 + $239 = $1291.71 so I've reduced the loss on this position from 1392.71 down to 1291.71 as long as iwm stays under 60. Its not a lot but it extends the range where I can do some make up work. The problem occurs when the market moves above my iwm puts like it did last month.

So I actually want my puts to expire in the money, so this pullback is working to my advantage. The only problem is that I need to place my rut call spreads carefully so they don't end up losing. The current 570/580 call spread I have was put on mostly as a hedge in case the market rallied strongly on me before I got a chance to get my offsetting iwm puts placed. Now that I have my puts in place I will probably close that spread and take a loss and re-establish it at a lower level. I'd like to get my rut call spreads in under 520. Typically in a bull market going long in the 8-10% pullback range is ideal so a 10% pullback on RUT off the intraday high around 590 would put us around 530ish, so I want to build calls under that, preferably 510/520 and lower.

Speaking of which, I added the following today:
bot sep 510/520 call @ cost of $902
 
I don't know what's going on but since last you updated your data, things are clearly not working out for you. Your shorts are hurting you more and more.
 
Quote from valpak:

I don't know what's going on but since last you updated your data, things are clearly not working out for you. Your shorts are hurting you more and more.
More...

Yeah not much to do, the market is not really cooperating....but then again it really hasn't since March. So far still hanging in there but the one year mark is quickly approaching for this strategy and I am clearly not going to make the 30% return but lets see what I can do here.

IWM closed at 61.91 on Friday and I had the following positions close:

bot sept 570/580 call @ cost of $592, this position expired in the money for a profit of $408, I am adding that profit to the following position:
short 100 shares iwm @ credit of ($4436.88+$408) = $4844.88

bot sep 530/540 call @ cost of $907, this position expired in the money for a profit of $93, I am adding that profit to the following position:
short 100 shares iwm @ credit of ($4447.29+$93) = $4540.29

bot sep 510/520 call @ cost of $902, this position expired in the money for a profit of $98, I am adding that profit to the following position:
short 100 shares iwm @ credit of ($4893.16+$98) = $4991.16

sold 60 sep iwm put @ profit of $261
sold 60 sep iwm put @ profit of $247
sold 60 sep iwm put @ profit of $277
sold 60 sep iwm put @ profit of $320.25
sold 60 sep iwm put @ profit of $262
sold 60 sep iwm put @ profit of $224

Adding up the profits from the closed 60 iwm puts generated a profit of $1591.25

Total profit Sep cycle = $1591.25
As for returns I have the following:
Jan cycle = $683.17
Feb cycle = $2051.06
Mar cycle = $796.14
Apr cycle = $389.58
May cycle = $681.73
June cycle = $1587.96
July cycle = $28.44
Aug cycle = $1304
Sep cycle = $1591.25
Total gain = $9113.33
Percent return = 9113.33/30000 = 30.37%
So I've hit the goal of generating the 9K that represents 30% return so now I will start locking in losses on my short IWM shares with any future profits from the IWM puts.
 
Last Friday I opened the following position:
bot oct 610/620 RUT call @ cost of $552

Today I opened the following:
sold 65 oct iwm put @ credit of $404

So I have the following open positions going into October:
short 100 shares iwm @ credit of $4540.29
short 100 shares iwm @ credit of $4991.16
short 100 shares iwm @ credit of $4844.88
short 100 shares iwm @ credit of $4900.63
short 100 shares iwm @ credit of $5005.44
short 100 shares iwm @ credit of $4942.23
bot oct 610/620 RUT call @ cost of $552
sold 65 oct iwm put @ credit of $404
 
On friday I opened the following:

sold 65 oct iwm put @ credit of $549

I didn't add anymore on Friday because I wanted to see if the pullback we got was going to go deeper or if it was going to get bought up.

Sure enough it got bought up looking at the rally on monday. It appears we're consolidating and I am leaning towards a move higher towards that 640-650 range. So today I went ahead and added two iwm puts:

sold 65 oct iwm put @ credit of $419.30
sold 65 oct iwm put @ credit of $419.30

So I now have the following open positions:
short 100 shares iwm @ credit of $4540.29
short 100 shares iwm @ credit of $4991.16
short 100 shares iwm @ credit of $4844.88
short 100 shares iwm @ credit of $4900.63
short 100 shares iwm @ credit of $5005.44
short 100 shares iwm @ credit of $4942.23
bot oct 610/620 RUT call @ cost of $552
sold 65 oct iwm put @ credit of $404
sold 65 oct iwm put @ credit of $549
sold 65 oct iwm put @ credit of $419.30
sold 65 oct iwm put @ credit of $419.30
 
I had to take advantage of the gift the bears offered up today and opened my remaining 2 iwm puts I wanted to open. Today I added the following:

sold 65 oct iwm put @ credit of $599
sold 65 oct iwm put @ credit of $629

Looking forward we've got the RUT close to testing the 50 day EMA which is around 577 so lets see if that holds. Currently I'm still bullish until the 50 day level gets taken out. Plus we've pullbed back pretty nicely to about 5-6% on the RUT and about 4% on the S&P. Again usually somewhere between 5-7% pullbacks are decent entry points which in this situation would take us close to the 50 day avg which is another reason I am still bullish here. Finally, we seem to be following the same pattern as 3 months ago where we pulled back to the tune of 9-10% on the S&P before earnings season and then we took off so lets see if the same thing occurs as earnings season starts next week.

I still have my long 610/620 RUT OCT spread open as well. At this point I'm keeping it open because if we do rally higher then obviously it'll be a good trade. If we continue to sell off and break the 50 day then this spread will continue to lose value but it also gives me a chance to add the additional ITM RUT call spreads that I want to open at lower strikes, and I should be able to get decent pricing for the spreads under the 530 strikes as the volatility will spike if the 50 day is taken out.

So just mostly a waiting game at this point.....
 
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