TRADES 8 & 9

“With your feet in the air and your head on the ground, try this trick and spin it, yeah
Your head will collapse, but there’s nothing in it and you’ll ask yourself, where is my mind”

– Pixies

I hit my exit on trades 6 & 7 yesterday.

Trade 6 was held for 17 days and probably should have been closed a week ago.  Profit was 1.4% which reflects the challenging environment for these trades.

Trade 7 was much cleaner post-adjustment as the center strike was set up really close to the money.  With the right legs of these fly’s getting crushed, I’ve started to experiment with moving the short puts closer to the money, while still keeping delta relatively neutral.  I closed trade 7 with a 5.7% profit after 17 days.  Here’s what the structure looked like right before closing.

Trade 8 is a similar setup to trade 7.  Expiration is January 5th (50 DTE) and the strikes are 2630-2590-2530.  You can see below that the center strike (top of the profit tent) is very close to the current SPX market price.

Trade 9 is a 2605-2565-2485 broken wing butterfly with a slightly bullish bias.  Also used Jan 5th expiration for the puts.

With the bulls stepping up yesterday and buying the dip once again, it looks like we’re continuing the move up and will see all-time highs soon.  I’ve been looking for an entry in XIV and yesterday I took a position at 107.57.

XIV is a ETN that tracks the inverse of the volatility index (VIX).  I’ve been experimenting with some volatility indicators and this appears to be a very lucrative trade if you can understand how it works.  Right now the VIX is in Contango, which means that the future price is higher than the anticipated spot price for a commodity.  The opposite of Contagno is Backwardation and that would be the time to be out of XIV and possibly enter VXX which is the VIX short-term ETN.  This most likely will be a much longer-term trade and I’ll continue to post updates.