April 5th, 2019
Weekly Recap and Look to Next Week
We said last week that we thought the trend line would hold and SPY would be tradable to the upside. We were right about the support holding but the gap up on Monday kind of put us in no man’s land from a trading standpoint.
We kept looking for a chance to go long, Tuesday was probably the best signal since the market consolidated all day. Opening at the high moving down and then showing strength back to the open at the close of the day. Thursday showed a weaker signal to us mainly because we were expecting more of a pull back. Today, another gap up and a small range.
Overall we just were not comfortable trying to trade it. So we stuck with our probability based trades and some diagonals that we entered with downside protection.
We closed one for a 8.72% profit over 8 days and managed to enter 3 more this week. All of them look good right now, but we just entered them so no surprise there.
One of our Strangles is causing some issues for us. IBM is trading close to our short call which expires on 4/18, but IBM has earnings on 4/16. This is a problem. Sometimes we get into this position because we have to defend a strangle but this time it is on us. We figured since it expired 2 days after earnings there was no way we would still be in this trade. But, we are. We have been looking at ways to defend but IBM has a habit of jumping on earnings and we may just take a loss if we see a good exit or are pushed to defend.
The other Strangles are fine right now.
Credit Spread – NDX
Had to defend this week so we rolled it into an Iron Condor for a May expiration.
Iron Condor – Index
We had a SPX Iron Condor on but had an opportunity to close it at break even, we took it since we now have an NDX Iron Condor to manage. Having two index iron condors going at the same time can either be great or a real pain. Because of how these trades have performed this year we were leaning toward a real pain so we got out of the SPX trade.
Iron Condor Probability
All of these are looking good right now.
We got into a couple of more diagonals this week. Mainly because we could not find iron condors we liked. We entered these with a lot of downside protection which limits our potential profit but reduces risk
TEST TRADING SYSTEMS
We did not enter any this week. The best signal was Tuesday but the market was really extended after the gap up Monday. I think the fact that we are 100% on these so far is making us really selective on the trades we take.
These test trades are about 50/50 right now for April expiration. However, if we take them as a group (which we are) we are profitable on the group. We are going to let them keep going for how. A couple of weeks left.
Our Delta has gotten even more negative this week. The market just keeps pushing higher which is skewing our account. The diagonals help, another reason we jumped into a few.
As we have already mentioned the market is extended to the upside. However, the candles are really small. I can see how it could keep pushing higher next week but not in a way we could trade it if it does. I need to see a pull back before I would want to get in.
If you forced me to make a trade today for next week, I would buy. But, since I don’t HAVE TO make a trade, I am staying on the sidelines for now.