October 19th, 2007 – A fitting end to the week

A fitting end to the week. CNBC was running their Documentary of the ’87 crash. I thought it would be a mini-series, but they ran the same show over and over. I wanted to enter some calendars going into the weekend. But I didn’t enter directional trades, rather it was an opportunity to adjust or sell off some profitable positions.
For entries, I was looking into a few other trades which include Skewed butterflies to take advantage of high Volatility. Today was too early for it. I want to get a reversing of the downtrend before I enter these type of trades. This drop was very healthy for the market.
LAST WEEK’s CHARTS– remember these charts? We are moving right to the middle of the uptrending channel. Check it out! These have been right on.
I had been looking at the Fibonacci Retracements during this sell off. Tim Knight on Slope of Hope, offered a great intraday post of this.
I want to speak further visually expand up this, with the upward channel and a 50% fib retracement by the end of the day.

IWM daily chart

Lastly:
I exited a number of great IWM trades that took advantage of this down move. Particularly the October 78/80/82 – 2/3/1 skewed butterfly, and a Nov/Jan 81p calendar. These were a trading idea from Red Option. I picked this up when the IWM was around 83.5 about two weeks ago. I exited the IWM butterfly today just after the market hit the 38.2% fib that Tim Knight mentioned.
Other trades for the day:
USB – Continues to widen. I sold 1 more unit @ .15 for the 32.5c calendar. I will very gradually exit this trade. However, it is right in the sweet spot for me, slightly OTM. The Dec expiration date is 63 days away, and there is still $1 of premium while the underlying sits 1.23 below the strike. Perfect.
Here my current USB Risk Graph. Dec/Jan 32.5c Calendar

UNM – 1 unit of Nov/Dec 25p (underlying 23.10) , with small entries between .15-20. I won’t add to this position unless the underlying moves up. There is only .45 of premium in the Nov option. I gave it a shot, but he underlying didn’t encourage me, as it moved away from the strike, and worse, ITM.
UTHR – picked some calendars up today.
PDLI – 1 unit Jan/Feb 20p for .05. I would have loved to pick up more, but the sellers were not cooperative.
VRSN – 2 units – Nov/Dec 35p for .33, 1 unit Nov/Dec 32.5p for .34. I tried to balance this out, but couldn’t get filled at my price with the 32.5p calendar. I am taking a shot on this combo calendar, as it does have risk if the underlying drops by more than 10%. It offers a wide Breakeven 30.93/38.61, with current underlying @ 33.

Here is the current Risk Graph for VRSN