A Big Relief Rally and Mishandling 5-28-22

 The majors booked 6+ % rallies last week and erased the 7-8 week consecutive losses. The rally gained steam after the FOMC Minute release. The indices closed above their 20 SMAs two days in a row. So far it looks like the March relief rally. This rally may establish new trading ranges. VIX hasn't given up too much territory with the rally. Bears may have room to attack again. I totally mismanaged this rally with very poor risk management. 

The IB Netliq dropped from 105K to 92K. It's below the minimum level again. I added 5K cash from ETQ over the weekend. It doesn't look enough so far. The leverage is up to 545. The realized P/L is -20K due to the added short SPX. The cash collected is $9.2K. I was greedy in collecting the premiums using butterflies instead of the simple debit spreads. 

The small accounts also took some heat. I kept selling bear calls against the rally. Most of them ended profitably. One of the butterfly call hedges in ET got into trouble with the last two days of the 2% rally. I had to roll them out. The collected cash is $2049. ETP booked a $7.35K loss due to the rolling. 

Overall, it was a depastures week in terms of risk management despite the $11K premiums collected. The biggest mistake was these added short calls from butterfly hedges. 

I must obey the -1+1 rule. Risk control is the key before anything else. I will have to give back the collected cash to reduce my leverage.   

 

The 7th Down Week 5-20-22

 The majors booked their 7th consecutive down week. It only happened during the dot-com crash in 2001. The bubble of the last 10-plus years burst again. The selloff has been strong. The MACD and RSI weekly charts are in the oversold territory now. We may see a technical bounce next week after today's wild swings. 

The IB Netliq ended unchanged from the 105K last week. The leverage is up slightly from 468 to 473. The realized P/L is $8.9K. It was mainly from the risk reversals of deleveraging. The account collected $1935 due to there being a couple of hedges worked out. I am thankful that I survived the wild market this week. I was aggressively deleveraging my positions to keep the delta neutral. 

The 0 DTE system continues to be the bread and butter of my trading. It brought in $3780 profit with a good hedge win of $1300.  It withstood these 3-4% wild swings with my hedging strategies. 

Lessons learned:

1. Respect the trend. We are in a bear market;

2. I must deleverage my positions. Take advantage to do so if there is a bounce;

3. Realize that my old system is not working. I must exit all the positions in an orderly manner. 

The 6th Down Week In A Row 5-13-22

 The majors booked their sixth down week, except RUT had a small green week amount these weeks. There was a broad-based relief rally today that reduced some of the losses and corrected some over-sold conditions. The length of the downward movement exceeded the pandemic selloff but not in the same magnitude. NQ and RUT have fallen over 20% and are officially in the bear market. SPX barely avoided the bear market after today's rally. Is the market due for a little rest and consolidation?

The IB Netliq suffered a 6K drawdown. It went below 100K for 2 days. IB realized $17.8K P/L. The collected premiums are $4.3K for the week because some hedges are paid off. The leverage is still elevated at 468. Should I aggressively close these underwater positions so I can focus on the 0 DTE strategy which actually produces consistent profits?

The 0 DTE in my small accounts continues to generate cash. The total profit is $4.86K. The premiums are higher with the high volatility. The hedging strategy has been working so far. 

The lessons learned this week:

1. Be aggressive and consistent with the trend. I didn't reverse enough BP to BC based on the expected moves. 

2. Pay attention to the accuracy of my orders. I made two mistakes in selecting the strikes this week.   

The 5th Down Week 5-6-22

 The selloff continues for this week. The majors booked the 5th consecutive losing week. Only RUT had one small positive week amount the 5 weeks. All of them closed at the new low of the year. The price actions are quite bearish. SPX has lost 13% year to date. NQ and RUT are sliding into -20% bear market territory. The last time the five consecutive losing weeks occurred was the pandemic crash of 2020. The market may be due for a counter-trend rally soon. 

My IB Netliq ended at 111.7K, down 4.6K. It's in the danger zone again. The realized P/L is $8K. The collected cash is $5.8K, thanks to the 7K hedge profit from FOMC day. The leverage is up to 437 from last week's 423 since VIX is above 30 again. I suffered from another mistake of breaking the rule of -1+1 this week. After the surge of FOMC, I reversed 2 SC to SP partially on that night. I was only supposed to add 1 SP based on my rules. This mistake cost me more than 10K. I am still rolling the positions. A big lesson to remember. 

The 0 DTE continues to generate positive returns even in this volatile market. The net profit is $6.3K for the week. There was a $900 profit from a hedge on FOMC day. 

Lessons of the week:

1. Recognized and control my emotions. Sometimes I recognized the emotions, especially the fear during the wild market swings. I didn't make enough effort to control my emotions. 

2. Why don't I transition the IB account to 0 DTE since the 0 DTE has consistently been profitable. There is no point to continue struggling with the rolling and reversing these DITM positions anymore. It has been more than 5 years that I still couldn't unwind these positions. The old system is not working.