Disclaimer
This is for informational purposes only.
Discussion
Trade: Closed November 17 SPY $450 call position.
Trade 2: Opened the 50% position in November 17 SPY $440 puts.
Trade 3: Closed 50% puts position.
Rationale: Don’t like how the market is trading today at all. Breadth is weak, HY CDX is up, and VVIX is down less than VIX (I know it’s VIXperation day, but still). I don’t like being naked long the call portion of what is ultimately supposed to be a three-part November 17 expiry trade structure. Got too cute with it is the bottom line. “Bear Trap” post from last night still applies looking out to 8/25 Powell, but right here and now I don’t like the set-up, especially heading into FOMC minutes at 2pm EST.
Rationale 2: Three things are bothering me, overriding my “Bear Trap” analysis from last night. 1) Fixed strike VOL went up yesterday. 2) We got a distribution signal from yesterday’s breadth. 3) Larry Summers is out today talking about UST 10s averaging 475 over the next decade. Since he is part of the Fed’s unofficial communication team, that’s just more paving the way for a hawkish Powell on 8/25.
I will trade around the core put position as indicators dictate.
Rationale 3: Writing this the day after as I didn’t have a chance to update here in real time. I got spooked out of the position post-FOMC minutes as I thought the market looked squeezy. Obviously piss poor position management, the result of getting out of position in the first place. Disconcerting in the moment, but this happens in trading, especially when things get volatile around turning points. Key is to not over trade, step back, and reassess outside of market hours.