Even though I was bullish on the market going into the week two weekends ago. I figured on the retest of the uptrend line @ SPX 857, that was the place to make a bullish play. I began rolling out of my shorts @ SPX 865, I did well into that move.
On Thursday we broke 857, down to 817 (previous range low). On friday morning (expiration day) a trading partner of mine drew my attention to high open interest @ SPX 850. I took note of that, but I wasn’t around to trade it. I did sell a few call spreads at the end of the day, but I was still significantly delta positive.
Sunday night came and the futures were up. I would have sold a few ES futures to hedge my portfolio, but alas government regulation doesn’t allow for futures trades in retirement accounts. It doesn’t allow for more than 3 day trades in a 5 day period in accounts under 25K either… Another frustration worth noting.
The market moved down on monday due to bad bank news. I could do nothing with my short XLF. I should have NEVER sold additional puts on the XLF when it broke down from its triangle, and support @ 11.34. A stupid move that I will never repeat. I ended up exiting @ 8.65, as per my original plan.
I have a few other missteps for not being around on Friday. I didn’t exit my LLTC long calls in time. I did exit a few of my short hedges to early @ SPX 817.
I am getting smaller on the long side, and looking to be a net short rally seller. This market continues to be crap for the longs. My play going into the year was to play the range 820-1000. We have broken below that in a non-panicked, systematic way. The next low looks like SPX 750 area. A retest seems very probably. I will be a buyer there. But until then, I like the shorts.
My bets will be measured: I am looking forward to this new movie- BROKE
I am looking @ resistance levels of SPX 817 and 850. I will be quicker to change course when appropriate.
I use a few strategies, some are better than others. (2008: Percentage growth as compared to risk capital):
Skewed Calendar strategies: +193%
OTM option strategies: +4%
Backratio spreads: + 3%
Naked put: -9%
Long stock: +4%
Stocks under $10: -22%
OTM short put spreads: -12%
Overall up 58% (after commissions) for the year. I should be happy, but that was very tough sledding. These are similar ratios to the previous year, although a much greater gain in my skewed calendar positions. I seem to be a good directional fade, but as I keep telling myself… “You’re the best calendar spread trader on the planet”…. “and gosh darn it people like me”… Hahaha..
Making GOOD bets… what is your edge?