The market is still strong, putting in yet another intraday all-time high on the S&P. You know at some point we’re going to have a pullback, but when, nobody really knows. In the meantime, the volatility we experienced last week has all but vanished. Traders are getting embolden and care free as risk dissipates. Oh, protect thy goods, for ye not know what you do.
Even though we are directionless in our trading, choosing instead to take the anti-fragile approach of moving with the ebb and flow of volatility, we still have to pick stocks and options strategies to play. And with that choice comes a certain level of randomness that we can not avoid. Sometimes we pick winners, sometimes we pick losers. One thing is for certain, we pick those securities that have all the right stuff, the characteristics that have proven to win in a statistically significant manner. And that’s all you can do.
Here are the closing trade results for today, commissions and other costs are figured in:
|FDX||Bear Call Spread||($0.67)|
If only we were perfect, there would never be need for adjustments. But alas, we are not, and so there is such a need. First up was IBM. We opened the position with an Iron Condor as an earnings play, unfortunately IBM reported poorly, or I should say they provided poor guidance, which caused the stock to threaten profitability with the strategy. So we moved out the left wing by at least two strikes with the addition of a Butterfly.
The second adjustment was with Citi (C). We engaged Citi with a Straddle Strangle Swap strategy to take advantage of the low implied volatility rank, with the intent of first collecting on theta decay, then swapping out and selling into weakness, picking up premium. However, Citi had other plans and decided to rally right outside the ample bounds of our strategy, so we swapped out the short near dated contracts with long dated contracts and pocketed the credit.
Now we are ready for whatever else the Citi has to offer.
We Adjusted the following trades today:
|IBM||Butterfly||Moved the break even of the left wing out by 10 points, or two strikes|
|C||Straddle-Strangle Swap||We swapped OCT4 13 weekly Straddle with NOV 13 monthly Straddle to create a more inviting SSS|