04-08-10 Trade Update

As I stated earlier, the current conditions for butterfly trading in general are horrible on the RUT right now. When trading in these conditions, you have to expect some losses.

The last update I went over how I drew a “line in the sand” so to speak on the April 55 day trade. I decided to hold the position “as is” till either my max loss number was hit or it was profitable. Max loss was hit at the very end of the day on Monday, too late for me to pull the position, so I ended up holding the position overnight till Tuesday. When this happens, I will typically give the position a little more room in case the market goes in my direction, this time, it did not. We got a continuation of the up move on Tuesday so I had no choice but to pull the trade off.  Due to the conditions under which I had to exit, I took a larger than anticipated loss of $2872.  This will need to be kept in mind when dealing with the other trades this month as we do not want to exceed the monthly account loss limits.

The April method one is doing OK. This trade should have been a slam dunk winner, but again, because of how much we overpaid to enter the trade, it is barely profitable. On Tuesday, I was past the upside adjustment point. Instead of pushing this out to a condor, I decided to roll the whole position up 10 points . Also, I accidentally entered this position 1/2 size this month, so I doubled the contracts to get it back to normal size. Currently the position is up a whopping $60 and is shown below:

The April Method 15, same deal, should be up money but is treading water. On Tuesday, I sold the 610/660/510 put butter and added a 650/700/750 call butter. Position is up $32.00 and shown below:

The last open position is the May55 day trade. There has been no changes here, just watching paint dry. Position is right about break even  and shown below:

With the big loss of the April 55, the portfolio will likely be negative for the month. These months happen and again, with the current conditions, need to be expected, however, you need to trade through these conditions as you don’t know when the environment will change and you want to be ready when it does. I have a felling it will come soon and looking forward to the rest of the year!