A Quick Update
Dear valued subscriber,
If you have been watching the market for the past few days, you must be feeling a little dizzy by now!
To say that the market in general is making wild swings in both ways seems to be a little of an understatement. Added to the swings are the news of course. First the Fed cut, then the bond insurance crisis, then we have GOOG not meeting expectation and now MSFT and YHOO!
There is a reason why I’m market neutral most of the time. Because I’m hardly right in either directions! So you can stop asking me what I think. If you must ask, then do the opposite of what I tell you!
After the Fed cut, the market rallied! You should have caught the news. Dow was up triple-digit, so it seemed like buying a call to take advantage of the move up sounds like a good idea. Well, if you did that, I hope you got out before it the market closed that day.
A few days ago, I can’t remember which day exactly. YHOO reported not so unbelievable profits, so it looked like a good short. And look at YHOO now! Up 44.63%!
If you have been making profits for the past few days trading in and out intra-day (if you hold on a position overnight, your profit may become a loss), you rock! Maybe you want to share with us (not your winnings!) your trades!
If you haven’t been able to take advantage of the wild swings to make profits like myself, hopefully you haven’t lost much. I lost some paper money though. I was paper trading (thank God!) my ideas.
Well, at least our current positions for Feb expiration is not looking as shocking as the market as a whole.
The last advisories we had were on 24 Jan, which we closed our SPY iron condor initiated on 14 Jan and on 22 Jan, which was to roll down our put spread for the RUT iron condor initiated on 8 Jan.
For the RUT iron condor initiated on 8 Jan, we are now short Feb 790 call, long Feb 800 call and short Feb 610 put and long Feb 600 put for a net credit of $1.00. We initiated this iron condor for $2.55 credit on 8 Jan and we rolled the put spread down for $1.55 debit. So we are now net $1.00 credit. This position is currently worth $0.35 debit. We can buy back this iron condor now to lock in our profit but I think we can wait until this spread gets cheaper. We should start queuing for an exit when the price drops to $0.25 or $0.20.
For the 14 Jan SPY iron condor, we are currently left with the call spread: we are short Feb 147 call and long Feb 149 call for a net $0.19 credit. We initiated this iron condor on 14 Jan for $0.90 credit. We closed the put spread on 24 Jan for $0.71 debit. This call spread is currently trading at $0.08 debit. It seems very unlikely that the SPY will test near the 147 level any time soon. If you wish to close up this position altogether to free up your margin, please go ahead if you can get it filled at the lowest possible price. Otherwise, you can simply let it expire worthless.
Lastly, we still have a RUT iron condor initiated on 15 Jan. We are short Feb 760 call, long Feb 770 call, short Feb 630 put and long Feb 620 put for a net $2.20 credit. So far, this is the best performing trade we have for Feb because we haven’t adjust this trade at all (touch wood!). Let’s hope it remains untouched. This iron condor is currently trading at $1.40 debit. Our alarms for this iron condor have not been tripped so we’ll continue to let time decay do its magic. We’ll close up this trade as soon as it’s trading cheap, in the range of $0.20 to $0.30.
So, despite the crazy market, we are still expecting a decent profit for Feb! It’s so much easier to trade this way isn’t it? We are currently about 47 days to March expiration. We are stalking a few possible set-ups for March. We’ll enter the trades in a few days’ time. Meanwhile it’ll be a good idea to stay at the sideline and cheer for those brave souls out there trading! If you must trade something everyday, I wish you all the best! Perhaps you can tell us what is it that you are trading, so we can all cheer for you!
Take care out there folks!
Really busy recently with Chinese Lunar New Year coming next week. :p
Good trading and we’ll talk again soon!
Gary
