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The market shrugged off the increase in unemployment claims this morning and initially traded higher. This happened, of course, because I still had some Oct 700/710 call spreads open. As soon as I closed those spreads and took my loss, the market began to trade lower (it wasn't quite that bad, but you know the feeling). RUT traded as low as $699 before recovering to close at $705, down $2 on the day. SPX hit $1167 before retracing much of its loss to close at $1174, down $4. Trading volumes were flat to down a bit from yesterday's high levels. About 4.5 billion shares of the S&P 500 stocks changed hands, flat from yesterday, but both of these days were well above the 50 dma at 3.4 billion shares. Trading on the NYSE was down 4% and was down 11% on NASDAQ. Initial unemployment claims rose 13 thousand to 462k while continuing claims dropped 112k to 4.4 million. The PPI rose 0.4% in September, same increase as last month. Given the general absence of significant market moving news and the weakness in the financial stocks, the fact that the markets were able to recover most of today's losses was very bullish behavior. Personally, I don't fully appreciate the case for the bulls, but they appear to be controlling the market.
My Oct iron condor on RUT is almost completely closed; I have allowed the 610/620 put spreads to enter expiration to expire worthless. I closed the remaining 700/710 call spreads today. I have not tallied all of the damages yet, but the Oct position was a big loser; I will report the sordid details tomorrow with my post audit of the trade. The Nov iron condor has been hedged with Dec $740 calls and I rolled the initial 520/530 put spreads up to 600/610. The P/L for the position is underwater by $3k with delta = -$26 and theta = +$80. The delta of the Nov $740 calls stands at 27 so we are far from out of the woods with this position. Today's spike up in IV pushed the P/L down quite a bit.
So now we wait to see who wins the tug of war tomorrow.
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Intel's better than expected earnings appeared to get this market started on an upswing this morning that lasted nearly until the close. Weakness in the dollar may have fueled part of this move. It will be interesting to see if the unemployment claims report in the morning does anything to dissuade the bulls. It appears of late that all news is seen as positive. SPX ran up $8 to close at $1178 while the RUT was even stronger, rising $10 to close at $706. Trading volume was up again today with a 26% increase on the NYSE and an 18% rise on NASDAQ.
AAPL broke through $300 per share to set a new high. My Jan 2011 270/300/330 butterfly is now up 72%. However, that is balanced by the bath I am taking in my Oct iron condor. I closed out another five of my 700/710 calls today; I will close the rest tomorrow. I added Dec $740 call hedges to my Nov iron condor and also rolled the puts from 520/530 to 600/610. That position now stands at a position delta = -$32 and theta = +$75, so the adjustments helped the Greeks to get in a better position.
So now we watch to see if the bulls can continue the charge.
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The markets opened down this morning and after chopping sideways for a couple of hours, they headed higher. But a large sell-off late in the day brought the major indexes back to where they started. SPX closed unchanged at $1165 and RUT closed at $693, also unchanged for the day. The SPX candlestick for today was the classic doji, often suggesting a turning point based on the indecision or stalemate between the bulls and the bears suggested by the day's trading pattern. However, trading volume fell way off, making it dangerous to base any predictions on today's price movement. Trading in the S&P 500 stocks dropped to 2.5 billion shares, way below the 50 dma at 3.3 billion shares. Similarly, trading on the NYSE was down 12% and down 23% on NASDAQ.
My Oct iron condor on RUT continues its underwater journey, although each day is helping the position due to its +$325 theta. The Nov condor is in fairly good shape with a P/L of -$1310, delta = -$84 and theta = +$92. The fact that delta is of the same order of magnitude as theta shows that the position is on the edge of requiring adjustment if RUT trades higher.
I think traders are still trying to sort out whether Friday's jobs report was bad news or good news. In any case, today's market couldn't find a direction.
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The markets opened lower this morning but quickly recovered most of that early loss and traded sideways until after the FOMC minutes were released. The language is pretty vague, but discussions of further quantitative easing were discussed as perhaps being required "before long". But traders grabbed that life line and bought stocks, assuming that QE II will not only sail, but have the desired effect. Economists are divided, but many believe the effects on the economy will be modest. SPX traded up $4 to close at $1170, while RUT closed at $696, up $4. Trading volume also shot up across the board with a 13% increase on the NYSE and a 26% increase on NASDAQ. Trading volume in the S&P 500 stocks hit 3.6 billion shares, above the 50 dma.
My Oct condor continues to limp along; absent a market pull back, I will be forced to close the call spreads tomorrow. The Nov condor stands at a P/L of -$1,486 with delta = -$103 and theta = +$83. Another up day on RUT will necessitate some adjustments to this position.
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Initially the market faltered on the news of a loss of 94 thousands jobs and unemployment remaining at 9.6% in the September nonfarms payroll report. But then the consensus view saw this bad news as good news because it would likely prompt the Fed to further intervene via additional quantitative easing. This viewpoint sent the dollar plunging and that in turn helped the stocks rally strongly. It was certainly a surprising interpretation of the jobs report for me - but, I don't claim to be able to predict the market's twists and turns. The SPX rallied $7 to close at $1165 while RUT ran even harder, closing at $694, up $10. Trading volume was flat to modestly higher, depending on the exchange. Volume was only up 2% on the NYSE, but it was up 9% over at NASDAQ. Trading in the S&P 500 stocks was flat at 3.2 billion shares, just below the 50 dma.
My limping Oct condor was crushed by today's move. I didn't help matters when I removed the long Nov hedges this morning as the market dropped. I closed half of my 700/710 call spreads and will close the remaining call spreads next week. The only remaining question is to determine the size of the loss for October. I also removed the hedges on my Nov condor, but that was of minimal consequence for that position. However, by the end of the day, the short Nov $740 calls closed with a delta of 21, so this position will require more surgery next week, absent a pull back.
Enjoy your weekend.
