It’s been a while since I posted….I was traveling for work and had minor surgery which put me out of commission re posting. I ended up closing the June trades for a great profit about 1-2 weeks ago.
I am in the July and Aug trades all of which are about break-even at the moment. They were all pretty heavy delta negative a week ago and according to OV, we should have expected some significant paper profits because of the RUT falling from 1188 to 1153, but we haven’t. Completely different position than the models suggested. I understood this and sort of expected it with any decent IV rise but not quite as pronounced as it is right now. Usually, if things calm down just a little after an IV spike, the skew changes and time decay floods in and positions start to match the expected model. This time around, this won’t happen until we pass the two big events that are causing the IV spike — Brexit and the Fed meeting. The recent terror attack and the politics surrounding it also presents some issues. For now, market makers will keep pricing inflated. Not forever, since all premium must come out but at least until those events pass and there is some breathing room. Seen it before many times. For now, I am taking the opportunity to add more bearish leaning BWBs to the trades as they’re much more decently priced. I just paid 2.70 for a BWB whereas I was paying 3.40 just a week ago. So not only are they cheaper, but they’re helping hedge to the downside.
RUT has been a bitch since Aug of 2015. We’re having outsized moves and it’s made trading challenging. It’d be nice when the beast settles down a bit. This year alone, we had a 22% decline from Jan to Feb which was followed by a 22% rise up till Apr 28th. Making money in the Rhino trades during that environment is almost impossible. Following that, we had a 7% drop into May 19 followed by a 10% rise to Jun 8th (a 25% for the entire year @ Jun 8). Again, this trade can handle 7-8% fairly decently in any given trade period of 30 days, re not LOSING money but when you get a quick 7% drop followed by anther 10% rise, you start to have challenging trade management. Despite that, June did very well especially since we got out of most of it before the 10% rise. It’s really not normal to have 8-10% moves each month with whipsaw. I cannot wait for an environment that has normal moves 🙂
Our Jul and Aug trades should be able to handle any bearish fall so long as it’s not like 10-15% overnight. They’re all good till about RUT @ 1100. The position they’re in now, ANY stabilization or drop in IV will get them to probably max profit pretty quickly. We’ve got 35 days left and lots of room to the downside and lots of theta since we’re under the tent. Should be a good month unless we have a large correction.
I am traveling for 2 months again starting June 27. We’re doing:
Vienna (7 days)
Krakow (5 days)
Dresden (3 days)
Regensberg (3 days)
Salzburg (3 days)
Munich (5 days)
Freiburg (3 days)
Salzburg (4 days)
Arona (6 days)
10-15 days left unplanned
Undetermined whats after this..maybe south of France or north Italy. Any suggestions?