Raging Bulls 10-23-14

My hypotheses and plan:

1. ES/SPX: ES got pushed back to yesterday's high of 1940 area in European session. It looks ready to challenge the Fib 62% area again. The next upper target is around 1950. The downside is 1921 and 1913.
I will try to sell SPX naked for the first time after watched Karen, the Super Trader's video again.

2. Grains are up at open with strong export data. I will close some of my bull puts to lock in profit and re-enter them later. The primary trend is still down unless price action changes the picture. The lows should be in according to seasonality but the record high production numbers are not fully reported yet. Trade with what you see not what you believe.

Bulls have been very made at the last valiant sell off. Indices had another 1+% up day which recorded last 5 out of 6 days. I started to experiment selling naked SPX and RUT base on Karen's set up. Her main rules are, Starting at 50-60 days out, Out of money in 2 standard deviations for puts and at least 1 STD for calls, her Delta is around 0.5 and won't adjust a positions unless the delta is up to 3. She exit her positions at 50% profit for near by month and let current month positions expire worthless depending on  volatility.

It turned out the margin requirement is much less than I expected. I had a $1000 margin for a $780 premium puts. I guess because I have some other credit spreads and commodity positions helped to off set the full margin requirement. I will have to experiment the margin requirement more. Even with full margin of $17K per SPX contract I will be better off if I can collect $700 premium. One thing is that SPX spread is bigger for far OTM. I will have to learn more about selling SPX and pursue it with caution. I am only trading one lot at a time now.

Grains continue to push up on strong export report and slow harvesting progress.
I am getting ready to take stops for my bear calls in soybean and wheat. I followed my plan to lock in my profitable positions in wheat and soybean. I will re-enter them once the prices come down. I am OK if the prices don't come down again and the bottom is set. I will trade other months contracts to recover some of my losses.

Overall, I followed my plan well today except I was hesitated to take stops of my underwater bear calls in wheat and soybean. Remember they can be very volatile and persistent in one direction.