This has been a rough week! I am still going to stick by my guns and say that the market is in an oversold situation, but I don’t know if it will come back before Friday! Unfortunately for me, I only have until Friday for the market to come back or I am going to get hit really hard with some serious margin calls. As a result, this morning I closed out my MSH Iron Condor for a hefty loss and am still deciding on what to do with my RUT position. If you have read my blog for very long you know that trading capital preservation is a big deal for me, and something that cannot be taken lightly. I’m looking right now to decide how to proceed on the RUT position.
The problem that I am faced with is that the RUT is just below my get out mark right now, however since we are in the last week of expiration, the RUT will need to gap down an additional 8 points from where it is as I write this at expiration for me to “lose” as much as I will today. This is a very tough call simply because in my opinion its like we are trying to play market timer. No matter how I stack it this month is going to be a pretty nasty hit to the account – now its a matter of risk and cost management. Obviously I don’t want to hold on and just wait for everything to collapse like it has in the past 2 weeks, however, I also don’t want to give away any money.
Here are the details of the MSH close
- Bought MSH 470/480 Put Vertical
- Debit $5.70
- Almost 20% of trading capital
- MSH was trading at about 474 when I sold. Had I held on and the market didn’t move, the cost would have been upwards of $6.00. We will see on Friday how smart of a move it was.
I’ll keep an eye on things, and make a decision on the RUT play shortly. Enjoy your week and trade smart!
Update
A very painful exit. Well, the RUT started to collapse as the day moved on, and I have to leave for a while. I’m just not comfortable leaving this money on the table over night so I closed out the RUT position as well for $3.90. Both of these trades hurt… Again I still think we are oversold and we will get a bounce… But I still have money to trade next month 
If I’m wrong by 1 day that might not have been the case.
- Bought RUT 680/670 Put Vertical
- Debit $3.90
- Another big hit to the trading capital!
- The RUT broke the 680 level (that just floors me…) and I made a hard choice to walk. If I’m wrong, I lost a lot of money for nothing. If I’m right, I saved a lot more money
Well, scratch those gains for the year This month hurt quite a bit. I’m not worried about it in the long run – that is the way the market works. You win some, you lose some. I just don’t like losing. Quite frankly I’m still surprised that the market has dropped so much in the past few weeks. Corrections can be very profitable or very costly – this one for me was costly. Next time, I’ll be prepared!
I’m going to hold the paper money position overnight and see what happens… It might be a good move, it might not be. If it is a disaster, I’ll close early in the AM. If your trading those trades, you need to make your own decision – I walked with my cash on the line :).
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