The October selloff got worse this week. The majors continued the volatile move. The pattern of the week was an up day followed by a further downfall day. Friday was another knock on the bull's head. VIX pushed up to near 28 and closed at 24. The current downtrend is well intact. The majors are very close to retest the Feb lows and it may or may not hold there. The volatility may stay elevated until the midterm election on November 6. The dust may settle down one way or another. An oversold condition often stays oversold just like the overbought condition.
Most of my trades were working to stay afloat. The clients' portfolios were threatened by the big 3-4% selloff on Wednesday. One got forced close positions. I had to wire in another $15K borrowed from my IRA. I had to make more risk reversals for all accounts to reduce margin requirements. Overall, it was a brutal week.
My net liq was saved by the additional funding from IRA. There is not a whole lot left that I can borrow. My margin ratio is below 30% after Friday's expiration. I may have to add more reversals on Monday. I will have to reverse them back to bull puts if the market recovers next week.
Saturday, October 27, 2018
Friday, October 19, 2018
The Volatility Continues 10-19-18
After the big selloff last week the market made a big rally 2+% on Tuesday. Then the sales force came back. VIX jumped up to 20s but lower than last week's high 20s. IWM and QQQ are the weakest ones. So far SPX has retested Tuesday's b/o area and held at the low edge of it. RUT gave back most of the gains this week. It may go lower next week if the vol continues. Good earnings didn't help much as many hot names were faded after reporting. There is still not enough fears in the market. Many heavyweights are calling it would be short-lived.
I got slapped left and right on the big rally and the fall. Many of my bull puts were pushed into ITM. With the monthly expiry of the last two days, I had to roll out or close these positions. Also paid several hundred dollars to hedge my portfolio. Yesterday, I was lucky to make some premiums from these uneven butterflies to cover the hedging cost. I had to spend over $500 to close my two SPX 2770 ATM bull put. Glad my AMZN bull put was closed slightly above the money and only cost a minimal to close it. In this game, you win some and lose some.
Net liq closed at 116K. It's about the same level as last week. The margin ratio is above 50% for the weekend. So I will have fewer worries for a couple of days. I made a list of naked positions that I need to hedge. Most of my risk now is on the put side if the selloff continues next week.
I got slapped left and right on the big rally and the fall. Many of my bull puts were pushed into ITM. With the monthly expiry of the last two days, I had to roll out or close these positions. Also paid several hundred dollars to hedge my portfolio. Yesterday, I was lucky to make some premiums from these uneven butterflies to cover the hedging cost. I had to spend over $500 to close my two SPX 2770 ATM bull put. Glad my AMZN bull put was closed slightly above the money and only cost a minimal to close it. In this game, you win some and lose some.
Net liq closed at 116K. It's about the same level as last week. The margin ratio is above 50% for the weekend. So I will have fewer worries for a couple of days. I made a list of naked positions that I need to hedge. Most of my risk now is on the put side if the selloff continues next week.
Friday, October 12, 2018
The Big Selloff Of October 10-12-18
The market started a big selloff on Wednesday and Thursday on the rate climbing above 3.2% and concerns of earnings affected by the trade war. The majors declined around 3 and 2% in the two days. There was no any obvious trigger. The selling rolled like a snowball. The selling halted this Friday after the attempts of selling in the early afternoon. The majors except QQQ closed inside yesterday's ranges. RUT is the weakest, barely break even. The selling may not be over yet depending on some major earnings reports.
Most of the trades this week are defending the bull puts. My uneven butterfly long puts helped to make some profit. Rolled two of my bull puts to bear calls. One is out. Another of 1470 call from 1660 put may not be that lucky. I had to do the RR to reduce 10K margin on the put side. The last AMZN bull put went bad as it dropped 6% in the week. I had to roll 1850, 1840, 1820 bull puts to next week in order to stay out of the money. I was concerned if these puts got assigned. My other scalps of QQQ, SPX also went bad. Remember to stick to my rules of engagement.
My account got hit pretty hard on during the selloff. Net liq closed below 100K so I had to wire 20K from ET which is low on balance too. After Thursday's weaker close I wired in another 10K to hold me over. Most of my bull puts are underwater only recovered some today. I don't have many resources I can borrow funds if another wave of selling coming next week. I am in the surviving mode.
Most of the trades this week are defending the bull puts. My uneven butterfly long puts helped to make some profit. Rolled two of my bull puts to bear calls. One is out. Another of 1470 call from 1660 put may not be that lucky. I had to do the RR to reduce 10K margin on the put side. The last AMZN bull put went bad as it dropped 6% in the week. I had to roll 1850, 1840, 1820 bull puts to next week in order to stay out of the money. I was concerned if these puts got assigned. My other scalps of QQQ, SPX also went bad. Remember to stick to my rules of engagement.
My account got hit pretty hard on during the selloff. Net liq closed below 100K so I had to wire 20K from ET which is low on balance too. After Thursday's weaker close I wired in another 10K to hold me over. Most of my bull puts are underwater only recovered some today. I don't have many resources I can borrow funds if another wave of selling coming next week. I am in the surviving mode.
Friday, October 5, 2018
Higher Rates Hit The Market 10-5-18
The rate hike of last week started affecting the market this week. The small caps of RUT had 1% downside moves in 4 out of 5 days for this week. It's down 3.8% for the week. NASDAQ is red for all of this week after making a double top of ATH on Monday. SPX also made a double top then fall back. The interest rate above 3% appears scarier than the trade war and the North Korea nuke. The three majors are back into their August balance area. I am not sure if they will stay in the ranges or just a retest of the b/o areas before another leg up as the earnings session kicks off.
I had to increase my hedges in the put side as the downturn intensified. My changes of aggressively rolling bear calls during the new highs suffered as the market turned down. Three more of my bull puts are pushed ITM. The limited available margin really held me back. I need to look for new approaches to reduce the margin pressure. These broken wing butterflies for put protection helped out on RUT selloff. I made a couple of hundred dollars to pay off the hedges.
Net liq gave back about 12K for this week. It closed at 114K on a shaky level. The leverage level increased from 420 to 480 range. The margin ratio is above 50% for a change. Every Thursday and Friday I have to spend money and time to hedge for the weekend expiration. I am caught in a rock and hard place. Put side present a bigger risk for the portfolio should there is a crash or big selloff. The bear calls tied up so much of my funds as well.
I had to increase my hedges in the put side as the downturn intensified. My changes of aggressively rolling bear calls during the new highs suffered as the market turned down. Three more of my bull puts are pushed ITM. The limited available margin really held me back. I need to look for new approaches to reduce the margin pressure. These broken wing butterflies for put protection helped out on RUT selloff. I made a couple of hundred dollars to pay off the hedges.
Net liq gave back about 12K for this week. It closed at 114K on a shaky level. The leverage level increased from 420 to 480 range. The margin ratio is above 50% for a change. Every Thursday and Friday I have to spend money and time to hedge for the weekend expiration. I am caught in a rock and hard place. Put side present a bigger risk for the portfolio should there is a crash or big selloff. The bear calls tied up so much of my funds as well.
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