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The S&P futures signaled a strong open early this morning, based on a weaker dollar and bullish trading in the Asian and European markets. Stocks broadly rose at the open and the strong start was further fueled by a surprisingly strong existing home sales report; Oct sales jumped 10.1% to 6.1 million sales (5.7 million were expected). But shortly after that report, the market softened and traded slowly downward the rest of the day, but strong gains were retained. RUT closed at $595, up over $10 and the SPX closed up almost $15 at $1106.
My Dec iron condor on RUT now stands at a P/L of -$110, delta = -$85 and theta = +$139. The theta/delta ratio is weakening, now below 2:1. My short $630 calls are standing at a delta of 16, well below where I would pull the trigger on an adjustment. In addition, there are many technical signs that this market is overbought, plus trading during this holiday week isn't likely to move strongly in either direction. So I am not inclined to worry about this position at this point. Market trading volume was below average today and will likely diminish as the week progresses. I will be looking to establish my January iron condor tomorrow to take advantage of the holiday.
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A strong dollar and a disappointing earnings report from Dell started trading this morning on a negative note that continued through mid-day. The buyers began to pull the indexes back up during the last two hours of trading, but didn't fully recover all of the losses. RUT closed almost unchanged at $585, down about a dollar, while the SPX closed down $4 at $1091. Traders continue to worry about a significant correction, but the appearance of buyers during the last couple of hours of trading both yesterday and today is encouraging. However, this market is definitely nervous - be sure your protective contingency orders are in place.
The $680/$690 calls from my Nov iron condor on RUT expired OTM today, confirming our $2,060 gain (13%) for November. My Dec RUT iron condor is in pretty good shape with a P/L of -$50, delta of -$60 and theta of +$125. January options have 55 days to expiration, so we will begin to look for the opportunity to initiate our Jan iron condor next week.
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The futures were flat early this morning but then a couple of key economic reports changed the mood. The consumer price index increased 0.3% (higher than expected and higher than Sept) and both new housing starts and new building permits were down for Oct, again lower than Sept. This took the futures into negative territory and the market opened lower. The dollar approached its lows of Monday, but unlike recent sessions, the stock market did not rally in response. The markets traded sideways to slightly lower all day. RUT closed down about $2 at $600 while the SPX was virtually unchanged at $1110. Both yesterday and today, the bears made runs at breaking the $1100 support level on the S&P 500, but both attempts failed and support held.
My Dec iron condor remains essentially unchanged with its P/L at -$760, delta = -$14 and theta = +$66. The delta of my short $630 calls remains around 24 so I am firmly "on hold" - I need the protection of the Jan $630 calls, so I can't sell them, but it is too early to close or roll the 630/640 calls. So we wait for the market to make its move.
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Weakness in the Asian and European markets together with a stronger dollar started the market off in the hole this morning. It hit its lows around 11 am ET and slowly regained some of the losses through the balance of the trading session. Buyers appeared for the last two hours of trading and this can be interpreted as reasonably bullish. No major economic reports are scheduled for tomorrow, so it will be interesting to see if this down market has follow through or if it recovers at least some of the losses. RUT was hard hit, losing over $14 to close at $586, while the SPX broke through $1100 to close at $1094, but the SPX traded as low as $1088 intraday. RUT is right at its support level of about $585, so it could go either way tomorrow.
I closed my three Jan $630 calls for $8.40, a loss of $1,530. The volatility of this market and my adjustments back and forth are costing me much of the potential profit on this Dec iron condor; the maximum profit is now down to $2,950. The P/L for the position stands at -$550, position delta = -$63 and position theta = +$131. Our theta/delta ratio is acceptable and we have some room for the RUT to drop a little further, so we'll see what the market gives us tomorrow.
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The markets opened downward today, but within a couple of hours, they had regained most or all of those losses. Generally, it was a pretty slow uneventful day in the markets. RUT closed essentially unchanged at $602 while the SPX gained a dollar to close at $1110. I think it is significant that the SPX did not give back that $1100 milestone it crossed yesterday.
My Dec iron condor stands at a P/L of -$980, delta = -$20 and theta = +$58. This position is sitting "on the edge" in a sense. The Greeks look pretty good with a strong theta/delta ratio, but further movement upward will force my hand and necessitate rolling some of the those 630/640 spreads upward out of danger.
You may have noticed that it almost seems the market has been toying with me lately - I buy a long option for protection, then it pulls back and I sell the option and then it roars back at me. You will frequently find yourself tempted to think "someone out there" is out to get you. Don't! Every time you have that thought, double check your trades - are you following your rules? If so, everything is fine. If not, then use this as a "tough love" lesson from the market to strengthen your trading discipline. In general, the better you trade, the calmer your disposition will be. You are just following your rules and reacting to what the market gives you.
