Jeff 5:34 am on Monday, February 5, 2024
Tags: IronButterfly ( 141 ), spx0dte ( 421 )

SPX0dte

#SPX0dte Starting a new hashtag today to represent a shift in strategy, using a same-day #IronButterfly in non-volatile periods on days where no big moves are expected. I will still likely use condors on some days.

At 5:26am, Sold to Open $SPX Feb 5th 4920/4950-4950/4980 iron butterflys for 17.25, IV 19.5%. Profit goal is at least 10% of max, so close order is in to buy back for 15.50. Stop will be manual, I will look to exit if premium reaches 20.75.

I also have a tight condor in accounts that are under or near $25K, i have a tight condor as an alternative to avoid pattern day trading violations. This is 4915/4945-4950/4980 condors for 15.40. The order to close set for 13.85.

Jeff 6:34 am on Monday, February 5, 2024

Edit: profit taking for IB is set for 15.50, corrected above
Jeff 7:22 am on Monday, February 5, 2024

Murphy’s Law. Test week goes perfectly and the first live day does NOT. Stops have been hit. Looking to get out, maybe on small bounce here. Powell comments started the day with a sour look, then strong ISM numbers started the drop in earnest.
- matt0311 7:37 am on Monday, February 5, 2024
  
  Same here. Just unreal.
  - Jeff 8:36 am on Monday, February 5, 2024
    
    What was your trade?
    - matt0311 8:47 am on Monday, February 5, 2024
      
      Went for 4920/4950/4950/4980 just like yours, but just after market open and got 16.75. I did not have the nerve to wait once the stop was hit, but chased to close, cost me 3.30. Silly move on my side.
      - Jeff 9:08 am on Monday, February 5, 2024
        
        Not silly. In a more precipitous drop, I may have been stuck with a 5.00 or 6.00 loss, while you got out at 3.30. You played it more safely than me.
      - Jeff 9:32 am on Monday, February 5, 2024
        
        The hard question is whether, when we have a bullish market or Upside Warning… do we usually wait for sufficient bounce?
        
        Although 4 out of 5 days last week hit their profit target, 3 out of 5 days ended with max LOSS had we waited for expiration each day. This strategy
        1) risks less than the condors. (around 15.00 instead of 19.00)
        2) profits more quickly if it will profit at all, so less time in the risk
        3) is around 30-80% higher profit on winning days
        4) is around 30-80% higher losses when going with a 20% stop loss
        
        This should net out to a similar to better performance in bullish/quiet markets. None of this answered the “hard question” I posed, but I’m going to be pretty strict for at least this first week.
      - Jeff 12:32 pm on Monday, February 5, 2024
        
        I’ve been thinking…. (excluding the FOMC day which I would avoid anyway) last week’s max loss closes were after quiet mornings and profit was hit early, and the strong move came later. Today, the strong move came early… and when that move is down during Upside Warnings, it is most often answered with a bounce and return to flat. It may behoove us to clinch our fists through these drops and count on the bounce.
        
        Plus today had the ISM report, and lately these reports cause more volatility than usual because everyone wants to predict how they will affect Fed decisions. About 5% profit was available right before the report, and probably should have taken it.
        
        matt0311 6:09 am on Tuesday, February 6, 2024
        
        Liked your thoughts, especially the one before this post.
        
        Possibly one can wait a bit longer or extend the stops. All depends on your cash. On the other hand, maybe enlarge the list of days/times not to trade.
- Jeff 8:08 am on Monday, February 5, 2024
  
  Stopped on IC for 17.80, so loss of 2.40
  - Jeff 8:10 am on Monday, February 5, 2024
    
    Stopped on IB for 19.75, so loss of 2.50
Jeff 8:11 am on Monday, February 5, 2024

To be clear, my typical condor strategy would have been stopped today too, so while it is irritating it just wasn’t a day for neutral trades.
- Jeff 9:06 am on Monday, February 5, 2024
  
  Profit target hit for the IC, and closing in on the IB profit any minute now. Of course this is moot, since I already closed for a loss. Much like condors hitting their stops, the tough choice is how long to wait for sufficient bounce. Most commonly, a day like today, the reversal looks pretty obvious when it starts, but if you’re wrong, the loss becomes too big. When I closed this, I thought the likelihood was that my profit target would be hit today. But if wrong, the loss will get too big. This is why we have stops and don’t wait for expiration.