Trading Journal: August 18, 2023

Disclaimer

This is for informational purposes only.

Discussion

Trade 1: Bought 8/18 and 8/21 SPY $435 puts.

Trade 2: Doubled the $435 puts position.

Trade 3: Bought a lotto position in the 8/18 puts for an EOD plunge.

Rationale 1: Stuck to the plan outlined pre-market.

Rationale 2: HY CDX diverged materially on the mid-day rally.

Rationale 3: HY CDX.

Post Mortem

I’m still shocked the market didn’t plunge into the close. VVIX definitely acted bullish throughout the day, but I chalked that up to OPEX messiness, not a real actionable signal. HY CDX did not confirm the morning reversal at all, nor did defensive equity sectors. So, in hindsight that is my final lesson learned on 0DTE - DON’T DO IT. Always, always, always, buy options expiring PAST your target window. Bottom line. As such, I feel very good about the 8/21 puts, as I think the negative divergences I was seeing Friday will materialize early in trading Monday morning.