I won’t rehash old news as we you all probably know what happened overnight with the news from our politicians and the flash crash in the emini-SP. The only complaint I have is about my trading decision. Going into today I had a downside hedge against such a move as we are seeing in the emini-SP, currently trading around 1420. You can see the position and thought process here but without reading it was a SPX Jan/Dec5 1370 Put Calendar for a 4.15 debit, risking $415.
Yesterday I closed it out with 15 minutes of trading left as I was still heavy cash and only had 3 other positions on. My theory on yesterday’s price action was that it was bullish. I did not see the shorts able to push us lower when there was opportunity and instead they looked to cover and I liked the price action from a bullish standpoint into the close. Now you may argue well that bullish action was on news that the bill will be passed and the Fiscal Cliff is averted. Well you may be right but also I do not trade on hopes or foretelling of news. All I can control is the risk I take on my trades. I look at price and reaction and yesterday I liked the action for higher prices. Now if we were to have a lower close yesterday I would have kept the SPX Put Calendar on, but we closed higher so my plan was followed.
As for my current positions:
- AAPL – Jan 500/550/600 Iron Butterfly
- GLD – Jan/Dec4 165 Call Calendar
- GS – Jan 130/135 Bear Call Spread