The markets opened in positive territory this morning and traded gradually upward until about 2:30 ET, when the exact opposite of yesterday's market action occurred - a strong rally to close at the highs of the day. RUT closed at $661, up nearly $20 and the SPX ran $28 to close at $1098. The S&P 500 traded at a slightly decreased volume from yesterday at about 4 billion shares (below the 50 dma). Trading was down 7% on the NYSE and was flat on NASDAQ. This strong performance on the U.S. markets came after weak performances in Asian and European markets. Pending home sales data may have helped set a positive mood. Pending home sales for April are up 6% from March, and up 25% from April of last year.

So the extreme back and forth swings of this market continue. It is probably more profitable right now to be selling antacids than trading. My condors are in pretty good shape at this point with the June RUT 590/600 and 710/720 iron condor underwater by $2200 with position delta = -$17 and position theta = +$285, so this position is nearly delta neutral but is building some large positive theta decay. The July RUT 520/530 and 750/760 iron condor stands at a P/L of -$240, position delta = -$21 and position theta = +$95, so this position is also very delta neutral and the theta/delta ratio is strong at over four to one.

If you are a delta neutral trader, this market is probably causing you a serious case of self-doubt. But hang in there. The probabilities are on your side. If you decide to sit out July because June went badly, and then July looks like it would have been profitable if you had been in the trade, what will you do? A delta neutral trader must trade every month and must control his losses in the bad months. Predicting the direction and volatility of the markets is very difficult at best. Trading delta neutral is the alternative approach to the crystal ball.