Within the past 6 weeks, SPY has been up 8.7% for the year (as of mid September), then October's plunge took it to just barely up 1% for the year. From there we had a fierce bounce back and are now up 6.29% for the year. What a wild few weeks!
This past week was a huge one for earnings. BIIB was the trade of the week where I put on the 310/312.5 - 337.5/340 condor for a credit of 0.98, well past my minimum credit of 30% of the width of the spread. The short strikes are show in red and the long strikes are shown in green on the chart on the left. I put the trade on just before earnings at the blue bar in the middle of the chart.
After hours BIIB traded down hard, well below my short strike as going as low as 290. It was not looking good and I was facing a max loss situation with my short strike almost 20 points underwater.
But I stuck with it and BIIB bounced hard off the lows. It bounced so hard (as a matter of fact) that I sold another PCS (the 302.5/305) on the way back up for a credit of 0.81.. All of those trades went out max profit which is clearly a good thing.
Its a case where adverse excursions outside the market maker move will very often retrace due to the forces of the market makers themselves. We had a very similar situation in AMZN where the stock move against me for a max potential loss in the after hours session, then retraced and closed within the Market Maker Move for a max profit.
All this makes me realize that I'm not at all cut out for day trading. Day trading is more like a hair-trigger video game where the market is brutal and will seek out every stop and shake out every weak money player.
Weekly and monthly options trading is more like a chess game, and a much more forgiving one at that. It doesn't matter how hard the price moves against you. All the matters is the price at expiration and experience has shown that prices will remain within the Market Maker Move the majority of the time. When prices exceed the Market Maker Move (and do so in an impressive fashion such as ALXN this past week) great directional trades are born.
Also notable this week were new all-time highs in AAPL and Facebook (FB). Facebook reports earnings this coming Tuesday after the bell and you know I will be trading that one.
Have a great week ahead.
No comments:
Post a Comment