I tend to learn something…

I tend to learn something every down turn. This one is no exception. Will keep it short and sweet.

1. Always keep a hedge on. Whether that is VIX futures, SPX puts, /es put or puts on your portfolio. I calculated my SPX hedges that I closed 3 weeks before the market sold off, each contract peaked at 43k Christmas eve, I had 2. That would have more than offset my losses and given me a pile of cash to trade or pay off my mortgage. I think going forward I will sell some leap puts on something I want to own and use the proceeds to cover hedges for an entire year. Call it the house paid for lottery ticket. If it even pays off once a year is worth it. Even once every 2-3 years it will pay for itself.

2. When direction starts to change, quickly ratio your spreads for the directional kick. Perhaps as early as delta 30.

3. Long stock set up a 30 dte synthetic short. Sell 1 atm call on your stock and buy just as many atm puts. At least then your losses are capped and may be a lottery ticket again. Good idea for IRAs.

4. Always keep some cash handy for opportunities like this.

5. Once a spread is deep ITM, probably better to close it and start over. Commissions are low enough now even at TOS that I probably should have reset 3 of my #fuzzy.

6. Volatility creates opportunity but also sometimes wide spreads and trouble trading. What you thought was liquid not so much when the SPX is down 300 points. Better to have the adjustment on early.

7. Not sure the bear is over but today helped all my positions so I will start looking to unwind when I can. Market drops give you a chance to reset trades.

8. Once a bottom is put in go syntheic long and don’t cap your gains!!

Hope everyone else is recovering and has some cash ready 🙂

Just read a statistic

25% of the S&P is trading below 10x earnings.
On the techncial side, T2108 (% of stocks above their 40 day moving average) is still deeply oversold obviously at 6.45. It got down to 3.45 on Monday–it hasn’t been at that level since the implosion in Oct 2008.
Hoping today’s impressive action actually means something. Would love to be dipping my toe back in but I’ve been cautious. Some follow through (similar to the Dalia Lama’s promise of total consciousness)…would be nice.

OLED

#ShortCalls against #BullPutSpreads – More risk off on extra sales.

Bought to Close OLED JAN 4 2019 110.0 Calls @ .20 (sold for 1.15)

XBI

#LongCalls #LEAPS – Booking a full position and selling a half position.

Bought to Close XBI JAN 4 2019 77.0/82.0 Bear Call Spreads @ .09 (sold for .71)
Sold XBI JAN 18 2019 77.0 Calls @ .76

TQQQ

#LongCalls #LEAPS – Pounded this one pretty hard all the way down. Staying careful now to get out of the way in case of a big rally. Closing more extra sales for profits.

Bought to Close TQQQ JAN 11 2019 43.0 Calls @ .40 (sold for .67)

DG

#BullPutSpreads – Giving back a little of the profits booked on the way down and getting deltas back in balance. Selling against 110/90 bull put spreads so all good overall.

Bought to Close DG JAN 11 2019 109.0 Calls @ 1.35 (sold for .92)

WTW

#LongCalls #LEAPS – Triple sales on this one so taking some upside risk off even though these were still very safe. Not getting greedy here…

Bought to Close WTW DEC 28 2018 48.5 Calls @ .15 (sold for 1.85)