Joined Dec 4, 2012
319 Blog Posts

Why I Closed Out My SPY Call Trade

When I recommended calls on Monday in SPY, it seemed like a trade that I would be able to stick with for a few days. My oversold indicator got down to 29.34 intraday as SPY hit its low at $268.62 and I thought we were going to bounce as I looked at my intraday lines. So I recommended calls in my option service and here on this website.

The April $273.50 SPY Calls were recommended at $2.70. By the close, they were at $3.40 for a cool $0.70 gain and SPY had risen to $270.61. Somehow, by 4.15 p.m.the calls were down to $3.26. Yes, Oracle (ORCL) was off -6% but the futures were flat. Then today when the S&P 500 was up 10 point the calls were still not above $3.40. This was a serious WTF moment.

It is rare I see a 10 point move in the S&P that is not reflected in the option. It happened today. I checked with several smart sources to find out why most SPY calls were declining despite the drop. It did not make sense. So when something that does not make sense happens, it makes me pullback my positions.

The trade was closed out late this afternoon with a nice 22% gain when the SPY was at $271. But this trade still is very annoying because it should be a 35% gainer. Maybe when the FOMC makes their announcement tomorrow I will understand the odd action today.

For now I simply am going to “play present” and forget about this trade. Hey it made money so why should I complain.


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One comment

  1. mensch

    The broken correlations I noticed yesterday:

    SPY/$ Both went up which has been rare lately
    Gold/Junior miners There was some strength in certain names even though gold got clubbed
    Oil/$ Dollar trying to breakout and oil flew anyways

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