In the Japanese stock market, a black swan event happened on Sunday (8/4/24) night (US time). It started crashing after opening as the Japanese 0 interest policy started changing. Many financial institutions had to unwind their Japanese Yen 0% interest rate carry trades. The NIKKEI index was down 12% and SPX was -3% by midnight here. It was like an earthquake in the market. I have never seen a developed market down 12% in one day.
IBQ Netliq took another blow with the Japanese Yen crash. I started to buy SPX puts to defend my portfolio on Sunday night. The netliq went down to 50K. The account was restricted to hedge or close positions only. VX shot off the roof. I placed a $40K wire transfer order from ETQ to IBQ for Monday morning. The pressure was very intense that night. I stayed up until 3AM. The red liquidation warning was eliminated for the time being. SPX opened down 3% the next morning. The 5120 level was defended and buyers showed up. By the end of the week, SPX was flat as nothing happened but some real damage was done. The netliq was down 20.4K, -28%. The realized P/L is -8512. The cash collected is -$42,606 including the forced 5630SP closing for $41470 on August 8. I spent over $ 1.2K to buy hedges. The options' value decreased by 7% from 524.3K to -486.6K. The forced closed 5630SP affected the value change. The delta is flat at -15. The leverage is down from 992 to 619. The paid hedges helped temporarily. The total positions are C8 -1 and P8 -2. The netliq is barely above 100K and faces a liquidation warning over the weekend. There were 38 trades for the week. The commission cost is $110. I only had time to deal with the 3 August 1-1-2 positions until this Wednesday. I lowered the SPs and added SCs. The 3 bear traps are ITM now.
IBP got lopsided further with the crash and pop. I added 10K to make the rolling easier. The failed stop loss SP dragged the netliq down further. I did a risk reversal to the SC at the lowest point Tuesday night. It was a trade of fear. The market popped the next morning. I broke the rule of -1+1 on the SC side again. The realized P/L is $8442 for the week. The cash collected is $-3915. I had to spend money to roll these 5 DITM SPs. It's more than 1000 small cuts. I will be in more trouble if the bottom is in.
Lessons and Plan:
1. Anything is possible in the financial market. The only thing I can control is my emotions and discipline.
2. I will reserve an account for emergency expenses when and if I am out of this situation.
3. Place a stop-loss order right after a position is filled.
4. Recognize the emotions. Fear and overconfidence are both dangers. Let the urges flow through.
No comments:
Post a Comment