BRIM

Good evening, - Will keep it short as the weekend is right around the corner.

It looks like stops were triggered overnight as it broke above 1127 in S&P futures (ES), making a high of 1132.75 in Globex session. However we opened much lower at 1125.75 and closed below yesterday's close, which signals weakness to me. The Euro also selling off towards the afternoon with AUDUSD move down 100 pips from the high also signals that the risk on trade overnight might be short lived for now.

For the trading I had to trade long in the ES to protect against the short calls from 1120 and up, which saw me lose 6 points in total on the day. Overnight I actually sold a bit more 1160 and 1150 calls for October and November in case this break turns out to be a false break. I also turned the short calls at 1120 into a short straddle position with selling the 1120 puts for October.

Basically sitting with calls from 1130 to 1160 now, with puts from 1100 and downwards to 1060. I always try to stay as dynamic as possible and follow the market and adjust to new developments and I will continue that very much next week as I would like to increase the distance between some of the strikes a bit, especially if we move above 1135 I will roll some of the 1140 and 1150 to higher strikes.

This week turned out more or less flat, but I am very well positioned if the market would break lower at the moment. If it breaks higher I have to make further adjustments, but expect the volatility then to drop even further, which would help my short options portfolio.

Have a great weekend, take care

That gap at 1108.25 in ES (S&P futures) was finally closed Thursday on September and the market opened higher following better US weekly jobless claims data. But since we moved to the Decemeber as front month and that is about 5 points lower the gap is actually still open. So the gaps to look for are 1108.25 and 1054.25. Where a lot of traders rolling their positions to December contract and it turned out to be a range bound session.

Good summary of the day by Mr. Topstep, see link: http://mrtopstep.com/2010/09/09/big-roll-in-sp/

On the trading front I was caught a bit too short on the spike up on the weekly claims and had to make some changes based on that. I took profit on the short 1070 and 1080 calls to make sure I didn't have to worry about them if the market breaks lower as they were just valued at 2.50 and 4.5 respectively I made sense to close them and sell some 1110 short puts instead to get more premium out closer to market, so a larger move will not suddenly make some out of the money puts rise tremendously in value.

I made about 9 points trading long in the future on the day, but it was still not enough to make up for the rise in value on the outstanding calls. I did also sell a bit more 1120 calls for October and also added a new 1130 short calls to the portfolio. I also closed the 1090 in the money short calls I had for September for a loss, but of course that loss has been traded in long on the futures side, so I am not left with straddle at 1110 for expiration 17th of September, with more short calls at 1100 for same data. Also have some 1090 short puts for 17th of September.

For October expiration I have 1090's, 1100, 1120 and 1130's short calls and to the downside I have 1040 and 1030 puts. Very little economic data Friday, so not sure we will see any major move, so hopefully I can leave current portfolio over the weekend and start to move some to the September calls off the portfolio start of next week. Have a nice day

Good day.

Quite slow day Wednesday as the S&P recovered from the weakness seen in Asia and opened at 1092 trading up to high of 1103. Remember we have that falling resistance from the April highs coming in that 1102 area and it was not really able to break clean above this level. Still have the gap at 1108.25 from 11th of August to be filled and the 1054.525 gap from 31st of August as well to be filled.
Seems to be more and more people calling for a move lower based seasonals that market is normally weak in September and October. However I am not so sure, I see this week's price action and the reaction around this 1100 to 1110 areas as key. Although the key upside level to break for the bulls is 1126.50, I reckon that if 1110 gives way it could be testing 1126.50 rather quickly. On the downside I see 1080 as key support and a daily close below this level opens for a move lower again and that 1037 level is of course key support level.

As for the trading, Wednesday I made 2 points on the futures net, trading long and short, still a bit reluctant to chase it above 1100 as that key resistance zone has contained the upside well so far.
The only change I made to the options was to sell 1120 calls for October for 16.25 points and selling 1080 put for September for 8.50 points. I did close the 1050 puts for a nice profit, was kind of a roll to the 1080 puts to get a bit more premium in and leaving more gap between the 1070 to the 1040 puts in case we have a move lower. Still have most exposure to the upside above 1100 basically with calls at 1110 and 1120. Will look to make adjustments when we move out of the 1090 to 1105 range.

Little to report for Tuesday, generally slow day.

The S&P futures made an initial push higher overnight Tuesday, but it was never able to reach that 1108.25 level that is the gap from the 11th of August low. The gap from Thursday down at 1090.50 was closed in today, so the next downside gap is 1054.25 now from 31st of August.

Trading wise I did very little today as the market was more or less rangebound. I did took off a bit of the hedge on the long calls at 1094.25 as it looked to go lower, I figured it was less need to hedge the upside and I additionally sold 1110 calls for 17th of September.

Expect more action Wednesday.

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Good evening, willl keep it short on this Friday evening as the weekend is around the corner and have an early flight to catch tomorrow morning.

First of all my predictions from earlier this week turned out to be right that S&P futures would break out of the 1037 to 1098.50 range before Tuesday next week and also that 1037 should be a bottom near term and it should go up to the top of the recent range. Both proved right and I am sitting and wondering what will happen next? I see two possible scenarios. First scenario is a total take off and break above 1126.75 and new highs for the year above 1212. Other scenario is for a reverals back into the range, with a possible false break above 1108.50 or even 1126.75 before going lower. Max pain for most traders would probably be a break above 1126.75 to take out short stops and get traders long and then reverse back lower leaving the shorts out of the move and the longs in losing positions. I like to always look at what would cause the most problems for traders and note that down for possible future reference. For the moment it looks bullish, so my best guess is for a continued upmove near term, but we have a huge resistance area from 1104 to 1108.50 that must be broken first. There has been of course a significant move higher last week and correction should be normal, but what is normal about the recent markets moves?

As for today's trading I had to make several adjustments. First I took more profit on the short puts I had outstanding, closing the remainding 1050 and 1090 short puts for a nice profit. I also had a bit too much short calls on, so need to balance the delta a bit, selling 1070 and 1080 puts. Also sold some 1100 puts for September, right after the NFP release to make the 1100 short calls (that I already had on) into a short straddle instead of an outright short call position.

I also sold 1110 calls for September expiration as it made sense to have something just above the key 1104 to 1108.50 resistance zone. I had to take off some of the 1090 short calls that, which was somewhat hedged, for a loss as the exposure around the 1090 level was a bit high. Although, I still have a few 1090 short calls for September and tiny postion with 1090 calls for October. Sold more 1120 calls for October as it make sense to be short calls with effective break even above the 1126.75 last reaction high level. The reason being that if 1126.75 breaks (key level and August high) the 1030 and 1040 short puts I have will fall in value considerably and the volatility will drop as well, making the short puts and calls portfolio profit from the drop in volatility. Last by not least I made 7.6 points on ES trading to the long side all trades except one trade.

Could certainly been more aggressive to the long side after the dip towards 1093.50, but my strategy was to trade long towards 1103 or so then to leave it for a possible failure at that 1104 to 1106 resistance, which it did initially, but should have gone long again when the reversal bars showed up after the 1093 level held. But as the saying goes: "If ifs and buts were candy and nuts, we’d all have a merry Christmas” (Don Meredith)

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