The rally of early this week turned out to be a bulls' trap. US indices opened slightly down and closed the gap above within 1st hour. I thought it was going to be an range or up day since SPX only tested a half gap below then made a buying tail, plus today is the indices monthly option expiration day. It turned out that sellers had upper hands. The selling pressure was pressed until closing. SPX, RUT and QQQ closed down 1.5, 1.8 and 2.1% respectively. People listed several reasons for the sell off. Whatever it was. It's August. Watch out for risk to the down side.
Made 18 trades today. Out of another RUT bear call of 1385 in mid morning. Now my call side threat is reduced after 9 month of torment. Sold couple late Sept and early Oct bull puts earlier based on my assumption of range day. It turned out to be wrong. Also rolled out my SPX 2310 bear call. I spent a lot of time in hedging put side since I have some naked puts built from the run up. Tried ratio calendar to buy 1:2 put protections. It may be too close on the sell strike. RUT closed at 1358 while I sold a put at 1350 for settlement by tomorrow morning. I have SPY, IWM and QQQ puts are IMT or ATM that need to be dealt tomorrow.
Net liq upped 5.6K with the put side being pressured. Margin ratio is low but the weekend expiry projected to be OK. It may change after I roll out these small contracts. Will add hedges with rolling.
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