June 26 – Bloodbath thursday

That the down beat goes on

The Fed painted themselves into a corner over the past 5 months. Lower rates to boost the economy. Hold pat and let it work itself out? or Raise rates put a hole in commodities and oil, and potentially hurt the consumer? Every decision had a consequence. And right now the market is acting like an addict when drugs are withheld. This should have been allowed to happen back in January. But Ben had to save face during Davos.
Anyway, I am giving myself a pat on the back for getting very small in the market this week. It just didn’t feel right. I didn’t get too short, it just seemed like everybody saw the market going down. But heck, we had a meltdown anyway.
Oil hitting $140/barrel, GS downgrading C and others were all fundamental catalysts for the drop.
In the afternoon I heard a California Pension Fund manager say that his acct was down about 1.5 Billion on the day. And that is before the SPX dropped another 15 pts. Wow.
I was ready to act today, but I didn’t dare place any big bets.
Out of the gate things were in the red, there was a slight bounce within the first 15 minutes. Perfect.
GREAT TUNE. Hope this make you feel better. Gotta love the Happy Slip

SPY – Rolled my final 2 units of the JuneQ to July 131 in my calendar spread for a 1.50 credit. I originally bought this for 2.35. It was a nice trade. My July/Sept 128 calendars are growing nicely too.
IWM – Sold 1 unit of 71c for .96 @ 70.90 during the early move toward.
DDM – UltraDow bought 100sh for 63.52, stopped @ 63.08. I bought this 2x Dow long ETF to play a bounce.. that never happened. I had a good strategy with a reversal breakout, but the overwhelming down pressure overwhelmed it. The DDM ended @ 62.05.
MA – The big trade of my day.
Bought Aug/Oct 250p for 5.35 on a possible breakdown below a head and shoulder. MA tested it’s head and Shoulder bottom @ 268. It stalled around 273-274 and I was looking to play Volatility using an Aug/Oct put calendar spread. The mid price was printing around 5.60. I came in underneath @ 5.30 with 1 lot foot solders, no hits. I was filled immediately @ 5.35. I immediately sent a test sell at @ 5.75, filled immediately. Then did the same with a 2 lot. Same result. I kept flipping this 2 lot spread for a .40 flip, and then I did it more 18 times until the party was over.
UUP- bought 2 units @ 22.44. This long dollar play is a good contrarian play. I think after today’s bloodbath, we will see the Ben B and Henry P roadshow to talk up the dollar. The UUP is at the bottom of it’s range, and although it is not a mover of a trade I believe it will earn more than having that money in a MM fund @ .75%.
With the VIX relatively low 23.93, I think we there is still much room left for some fear and panic. A weak friday will create much anxiety over the weekend.
I am 83% in cash, however 6% of the invested amount is in the UUP (US dollar index fund). So 11% invested feels about 11% too much.
I was up .9% on the day. I was very pleased.
Current SPX Weighted Greeks
Delta: +33 Wrong way right now, but even with today Vega and Theta overcame the strong move lower
Gamma -1 Hardly anything
Theta +99 (small, but that is the price I pay for being liquid)
Vega +380 (as the VIX rises, I should gain)
I am going to be offering PrePaid Legal as a employee benefit tomorrow, so I won’t be doing much trading tomorrow. Probably a good idea.

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