Hey Guys,
The market is still in volatility mode. The S&P 500 is up a bit from where it was at the start of the day yesterday, but it's gone up and down plenty in between.
I haven't yet taken on any new positions today. I have buy limit orders in for the tickers on my watch list, but none have triggered yet.
I've had a number of positions close in the last 24 hours. Yesterday SNPS hit its stoploss and RJF hit its profit target. This morning I closed some stock positions that reached their time limits, and one was for a partial profit (CNC) and one was for a partial loss (EBAY). And then with my extra options account, I closed seven positions yesterday late in the day, and two were profitable and five were losses. So it was a mixed bag overall but with a decidedly bad week for my options account.
Despite the bad week for options, I want to relish in my good fortune on SPLK. That position looked like it had no chance at a good outcome, and then SPLK had a huge day yesterday and turned in a profit. That was a nice reversal of fortune at the last minute.
I also want to point out the difference between the outcome of two of my options positions. On one hand, I had a call spread for SQ. On the other, I had a deep-in-the-money call option on EBAY. The stocks for both ended up going down about half an ATR between the time I bought the option and sold it. But with the SQ options, I ended up losing almost the entire amount of premium I paid versus with the EBAY options I lost only about 35% of what I paid. This epitomizes the point I made in yesterday's email: that deep-in-the-money options take smaller losses than the spreads I trade (which are at the money). One of the tradeoffs, though, is that the gains are also smaller for deep-in-the-money options. So they have a smoother overall trading experience, but with less home run potential. It's up to you which tradeoffs you prefer.
If you have any questions or feedback, I'd love to hear from you.