As the title suggests two things got smoked today, the volatility in $IBM and $AAPL and the venison and beef I put on my Weber Grill.  I have previously posted my positions and adjustments in $IBM and $AAPL.  Last night’s post stated probable adjustments that I was going to do today.  My whole plan through recent weeks has been to trade small and seldom and I have been sticking to that as at times I become impatient.  Luckily this plan has paid off.

As for $IBM my plan was to adjust the position in the direction of the move of 1.50pts from 195.  Today it was to the positive side, so following my plan I added an equal amount of contracts in the trade I had on already and added the Nov/Nov1 200 Call Calendar  for a 1.01 debit (per 1-lot).  So my new risk profile is shown below:

The main take away from this is the increase in Vega as it essentially doubled by adding the 200 Call Calendar.  This is the thing that got smoked today and caused my original position to take a hit.  Even on the opening run up, the price did not justify the loss on the Calendar spread, but it was the decrease in implied volatility.  Being that a Calendar is long volatility, this causes more damage to my position.  Looking at $VXIBM (the $VIX for $IBM), you can see that it saw a -7.36% decline.  On the plus side it looks to be at the bottom of a short-term range.  Ideally tomorrow this position drifts towards the 195 price level while seeing an increase in volatility.  As of the close today, and all else being equal, for each 1pt rise in volatility this position will theoretically gain  $97 (see Vega on Risk Profile above).  Below is a chart of the $VXIBM showing the range I am looking at:

As for my $AAPL position I closed the Weekly put that I put on yesterday near the open for a -$84 loss.  I then closed out this week’s 580 Call by buying it back and then sold next week’s 575 Call.  Like $IBM, the implied volatility in $AAPL got crushed by -7.65% as measured by $VXAPL.  I decided to roll down the sold strike from 580 to 575 as I am still content with the upside profit potential and this also gives me more room to the downside.  This also captures a 1 standard deviation move  (blue highlighted area) to next week’s expiration, giving me a favorable probability along with chart structure.  You can see the order and new risk profile shown below with the orange line being the profile at next week’s expiration:

On the chart below is my downside breakeven and how it is also at a favorable support level that also would be within a 1 standard deviation move:

Increased volatility would also benefit this position as it would increase my Vega and also push my breakeven to a lower level (not substantial).  I must say that the price action in $AAPL is not encouraging, but I do believe we have some market upside and this would limit the downside to $AAPL.  Also I think buyers would step in near the 570 level as this also correlates with the low of the prior earnings report in where $AAPL saw a -4.31% decline (close to close).

Those are the market comments and below I included a picture of the meat that I smoked today on my Weber.  The london broil is on the bottom left and the rest is venison.  I never smoked a london broil before but thought what the hell since I was smoking some venison, 1 piece being a tenderloin.  Also that was another reason for adjustments today as I will be doing some rabbit hunting with friends Friday and Saturday so checking my positions will be limited.  One thing I might do is roll the $IBM sold strikes to next week or I just may close it out.  Either way I am looking more forward to playing Elmer Fudd than I am to Trader Guy.  It’s always important to remember when to take those breaks and right now is good timing.  I would like to be around for NFP, but that’s what happens when you hunt with people that aren’t active traders…but wouldn’t trade it for anything.

Some meat to share for the weekend.  Forgot to take after picture but damn that smoked food smells great and it also gets into your clothes.

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