I was filled for an additional 25 contracts to the May 2010 IWM(82.95 +1.77) Iron Condor position in the paper money account.  This time the fill was for $0.55 credit, a reasonable premium to the original position.  I’ve gone ahead and adjusted my strike prices for the SPY(134.54 +1.86) order that is outstanding; these have been moved to 124/126/112/110 for a $0.50 credit, this order may fill if implied volatility spikes up nicely.

As of this evening the IWM position is profitable to the tune of a whooping $12.50! As with any position with 44 days till expiration, I’m not expecting much from it today. As you can see from the risk profile on the left, this position won’t do much until late April into Early May.  At that point, assuming the IWM hasn’t moved much I may unwind to remove risk and capture a nice return on capital at risk ($15,000).

It’s time to let time do its magic work.

Now that I’ve finally gotten everything closed out, it’s time to get the Condors rolling.

I’ve thrown two orders out into the papermoney portfolio for a 50 lot Iron Condors on the IWM(82.95 +1.77) and the SPY(134.54 +1.86).  The IWM Condor should get filled fairly quickly, however the SPY has been put in well above the market/mid price and likely won’t get filled.

Here are the quick details on the orders:

• IRON CONDOR SPY 100 MAY 10 124/126/109/107 CALL/PUT @ .50
• IRON CONDOR IWM 100 MAY 10 73/75/63/61 CALL/PUT @ .50

Both of these positions sit about 1 standard deviation away from the current price of the underlying and provide a fairly healthy return on capital at risk.  These are a lot closer than most of the Condors that I’ve put on in the past.  I’m experimenting with getting closer to the underlying to increase the return, while not dramatically increasing risk.  I’m also planning to exit these rather than letting them expire worthless, so only time will tell how things work out.

The size of the order is a little small based upon the risk management strategy that I’m planning to employ in this account.  Right now, these orders will require about $7,500 in risk capital.  I’m planning to allocate around 1/2 of the account across 4-5 positions in a month.  That means that I need to allocate roughly $10,000-$12,500 to each trade.  I’m fishing right now to see what fills, if the IWM position fills, I’ll likely add another 25 or so contacts.

I did throw a few of these out in another account last week, currently they are up quite nicely and appear to be performing as expected.  I’ll post an update once I get fills etc, along with a little more analysis.

*REMEMBER: This is FAKE money… If it goes poof, then who cares.  :) Read the disclaimer on the website, it is VERY important that you read it – period.

Who knows any more   It looks to me as though we are getting close to a very important cross roads here in the /NQ and /ES. I’ve jumped into a slew of SPY Calls to balance off the Puts that are open right now. The papermoney page is up to date.

The futures are up tonight and if we break higher, I’m going to start shorting puts against my JUN’s to capture some of the volatility we have right now. I don’t have any charts to offer tonight as I’m running short on time.  Class has started up again and I’ve been buried in Macro textbooks and statistical formulas.

For some good stuff, head over to The Slope of Hope, and Evil Speculator.  Both of those sites have some excellent analysis on what is happening right now.

Quick update here as I have to catch a plane in just a bit.  I’ve entered into long CALL positions on the SKF and long PUT positions on the SPY in the papermoney account.  My personal account is following the SPY position, not the SKF position.  I am leaving a lot of powder dry in my personal account to trade /ES and I don’t want to tie up capital in the SKF trade.

SKF

The financial system is still horribly broken.  I expect a near term correction and anticipate that it will be led by the financial sector.  When that happens, SKF should shoot up.  My entry on this was a bit early so we will need to see additional declines in financials to achieve healthy gains.  I still remain confident in this play.

SPY

We should retrace towards the 770 level on the SPX(1344.90 +19.36).  800 remains a reasonable level of support, however I expect a pullback towards 770 before a substintial push higher.  I have purchased the June contract to buy enough time to allow this to develop.

Trading in this market is extremely difficult.  I’ve been fortunate enough to make a nice return so far, however I’ve made more mistakes than I care to admit.

For example, just this morning I committed a super blunder… Over the weekend, Citigroup received a huge bailout package and the market responded this morning.  I figured this was a situation that could be scalped, and decided to go ahead and do that. 

To scalp this move, I did two things… 1 purchase a bunch of Calls on the DJX, and a bunch of Calls on C.  First move, smart, second move stupid.

Why was buying calls on the DJX smart… Well, because I trade indexes… I tend to have a MUCH better feel for the overall market disposition, and I do much better when trading indexes or larger sectors.  I tend to lose lots of money when playing a single stock.  So, back to C… I bought those calls at about the high of C for the day, so I’m long a ton of C 7.5 Dec Calls that will be worth next to nothing soon enough…

Now, for the stupid part of the DJX trade.  Rather than setup a contingent stop on the trade and allow it to ride the market movement up, I simply set the trade to close out as soon as the SPY hit a daily retracement level.  This was just silly.  If the market retraces, fine, that is what a stop order is for.  Instead of properly using a stop to close it out, I simply put in an automatic order based on the price action of SPY and closed it out WAY early.  If I’d have simply kept it open, there was another 1.5 on EACH contract during the day.  This wasn’t exactly a small position, so $150 X a bunch = a lot of money left on the table.

Now, to get really, really stupid.  I’m still long a truck load of C calls, and now a bunch of DJX PUTS! So, I’m betting against myself…. you might make a case for hedged, but it seems like a bet against myself to me… And better yet, I’M ON A PLANE ALL DAY TOMORROW!

So, what to do… Well, I’m going to properly set up some Contigent Stops on each of these positions before the open tomorrow.  I will set these up as One Cancel’s Other orders on the TOS platform.  The Stop will be contingent on the price action of the underlying equities, they will drop in based on price action.  Then, I’ll have contigent Trailing Stops that will drop in based upon price action as well.  If the prices move in my favor, the trailing stop will drop in to protect my earnings, while the initial stop will protect my downside exposure.

If things work out nicely, I’ll capture quite a bit of premium… However, it all depends on the price action.

Here we go again. It’s just about option expiration Friday and it’s looking like the papermoney and my personal positions are all shaping up to be quite nice. I’ve also put out a few orders for a few new May positions, basically copying the current April ones and rolling them out. I’ll post the positions when the fills come in.

As I’ve started to trade the DIA(128.37 +1.53) and SPY(134.54 +1.86) products a little more, I’m finding that the per contract commissions at thinkorswim are starting to get very expensive. I actually killed a nice DIA(128.37 +1.53) trade this evening because the commissions knocked down the ROI. I’m on the hunt for another online broker that I can use to open up a secondary account to trade larger volumes; this will very likely end up being optionshouse.com

Anyhow, I’m still a huge thinkorswim fan and truly believe they have some of the best software in the business. I’ll do some more research prior to opening a new account… only time will tell.

What is that??? Yes indeed I just just finally put on a new trade. I know it has been quite some time, but I figured it was time to get my feet back in the game. This play is a little more on the aggressive side, but I think it will work out pretty nicely. Here it is:

Sold 50 SPY April 2008 143/145 123/121 Iron Condors @ $0.28

• Credit $1,400
• Commissions $(309.95)
• Margin Hold $10,00

Update:

Okay, lets do another one. This is on the DIA(128.37 +1.53)

Sold 100 DIA April 2008 132/134 112/110 Iron Condors @ $0.18

• Credit $1,800
• Commissions $(609.95)
• Margin Hold $20,000

So far, so good!  Today the ‘basket’ of positions I opened on the 23rd gained another $2,500 of so of value.  As the VIX(17.10 -0.88) continues to plummet and the indexes move further into positive territory move money moves into the account.

Most of the positions are now worthless, so I’m planning to spend a little cash on commissions and then close them out. There are only about two weeks left until expiration and given this volatile market, I’m willing to spend some money to make some secured gains!

Anyhow, I’ll post updates as the positions are closed.  Trade smart!

Well, well, well… That was a pleasant surprise closing in the markets today.

Let me update you on the paper money portfolio.

This morning, right after the opening when things were in the toilet I was filled on all five of my positions. Of course, having a great broker I received price improvement all every last one of these.

Here they are in order of execution:

• Sold 200 Vertical SPY(134.54 +1.86) Feb 2008 122/121 Put @ $0.28
  • Credit $5,600
  • Commissions $(609.95)
  • Margin Hold $20,000
• Sold 200 Vertical QQQQ(0.00 +0.00) Feb 08 40/39 Put @ $0.18
  • Credit $3,600
  • Commissions $(609.95)
  • Margin Hold $20,000
• Sold 200 Vertical DIA(128.37 +1.53) Feb 08 111/110 Put @ $0.22
  • Credit $4,400
  • Commissions $(609.95)
  • Margin Hold $20,000
• Sold 200 Vertical IWM(82.95 +1.77) Feb 08 61/60 Put @ $0.21
  • Credit $4,200
  • Commissions $(609.95)
  • Margin Hold $20,000
• Sold 100 Vertical VIX(17.10 -0.88) Feb4 08 32.5/35 Call @ $0.67
  • Credit $6,700
  • Commissions $(309.95)
  • Margin Hold $25,000

The long and short of it is that I think that fear was at a high this morning, and that the market has hit a short term bottom.

At the close of the market today, I had a paper money unrealized gain of roughly $13,000 on these positions. I plan to keep them around for a while as we hopefully continue up a bit more and then I may exit early to lock in profits in this volatile market.

Please take caution in this market. If you are not comfortable with a trade – do not put it on. It is critical that you understand the risk that you are signing up for, especially in highly volatile markets like this.

Okay… So I think this is the bottom.

Could I be wrong?  Yup… If I am I may blow through about 100K of the paper money account, however I don’t think that is going to happen.  I’m working on a series of positions right now.  They are along a ton of different ‘minis’.

When I get fills on these tomorrow I’ll update the portfolio and describe my thoughts on each of these.  Overall, I think we have hit a temporary bottom and I’m willing to play it.  So here are the tickers:  IWM, DIA, SPY, QQQQ and the VIX.

My orders are as follows:

• Sell 100 VIX Feb 32.5/35 Call Verticals @ $0.45
• Sell 200 DIA Feb 110/100 Put Verticals @ $0.13
• Sell 200 QQQQ Feb 40/39 Put Verticals @ $0.13
• Sell 200 SPY Feb 122/121 Put Verticals @ $0.18
• Sell 200 IWM Feb 61/60 Put Verticals @ $0.14

I’ll post the updates as soon as I get them.  Good luck, hopefully I’m on the right side of this.  If not, it may be quite costly.

Trade smart!