Well today, I am in the house of pain. I was “early” in my thoughts that we would be down this week. In trading, “early” means wrong. I will take my lumps and admit that I was wrong. Self-flagellation is the mantra for the day today…it appears. Ouch!
However, I am a big believer that until the market shows you a change, things really haven’t changed. Over the past 6 months, this is the common theme in the market. We get rallies and everyone is saying the worst is over. Then, we get sell-offs and everyone is talking about how we are in a recession. If you trade volatility, this is your kind of market.
I am not changing my thesis just yet. I don’t think we are out of the woods. In fact, this is just the rally I was hoping would happen. I don’t like putting on any position unless I can get a good price. Today, I am aggressively shorting the market. This can be difficult because there is so much short covering and people on the sidelines with cash putting it to work because they are worried they are going to miss the move. So much positioning today and the bulls sure have the upper hand.
Yesterday, I purchased some out-of-the-money SPY Puts for $1.93 (including all fees) at the April $130 strike price. I also purchased some Citi (C) Puts for $0.78 (including all fees) at the May $17.50 strike price.
Today, my plan is to leg into some more SPY Puts hedging my strike price, but still staying in the month of April. I already purchased some $132 Puts and I am planning to get into some $134 Puts if the price is right. Also, I am looking to get into some more C Puts at the May $20 strike. Last Friday, my plan was to get into some April $20 Puts in C, but with the 10% run-up in C this morning, I can buy myself another 30 days with the May’s.
This is definitely gut-check time.
Filed under: The Market | Tagged: C, options, puts, SPY
