July 8, 2010 Trade Update

Hi All,

If you recall, yesterday morning the  July trades were not looking so great. On Tuesday, I yet again decided to double the size of both positions and roll both trades down 10 points. For the method one trade, this meant that we now had eight – 600/620/640 iron butterflies, we were down $340 and I had just increased the positive deltas. For the method 15 trade, this meant that we now had two – 570/620/640 call butterflies, we were at breakeven and again I had increased be positive deltas. Basically, I was looking at where major support was on the Russell 2000 and at the pattern it’s been in since late April. The Russell has major support at 580 and in addition, the pattern has been that the Russell drops around 100 points and then has an aggressive bounce. Therefore, I took a bit of a gamble that the Russell would bottom out at around 580 and bounce. Luckily, that’s pretty much what it did, and when it did, the profit and loss number on both trades came up very close to their targets. Since I’m near my profit targets and have only seven days until expiration day, I decided to close the positions. I’ll show you a graph of the positions this morning and then give you the profit and loss numbers.

The July method one:

I close the method one trade this morning for a profit of $768 after commissions. The maximum capital I had in the trade was $3544. This comes out to a 21.7% profit on invested capital or a 19.2% profit on our planned capital of $4000.

The July method 15:

I closed the method 15 trade this morning for a profit of $1320 after commissions. The total amount of capital in the trade was $4398. This comes out to a profit of 30% on invested capital or an 18.9% profit on our planned capital of $7000.

The only trade left right now is the August 55 trade. It turns out that selling off the 640 butterfly was a bad idea, at least for the short-term. But however, I feel was the right thing to do as I needed to offset the risk that I created when I doubled my position size on the July trades.  Anyway, the August 55 day position is currently up about $950 and is still doing fine. Position is below:

That’s It for Now, looking forward to August!