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The Current Market

Discussion in 'General Discussion' started by Teddy, Jul 14, 2016.

  1. Teddy

    Teddy Well-Known Member

    I didn't think we would hit SPX 2168.99.
    When I look at this, it almost looks like June 23/ 2015 where the market went from 2072 to 2130 (2.8%) before retreating to 2044 (4.2%).
    The current market went from 2000 to 2169 (3.1%). It seems almost silly but it seems to go through these big cycles which apparently is normal.
     
  2. Marcas

    Marcas Well-Known Member

    Neither did I think RUT will go above 1200.
    It is pretty important to me as I'm sitting on big paper loses. I look at volume and other things and I'm hesitating to adjust heavily (did minor one though) resulting in v. high neg delta. Not a first time it happens. Just watching. It looks like we are going down now.
     
  3. Teddy

    Teddy Well-Known Member

    I use the Talyor expansion to adjust my deltas to minimize the losses by keeping my
    delta ~ -0.5 e x gamma
    where e = expected move in the SP X ~ 22 points for a 1% move for the SPX.
    I don't expect volatility to drop much more so expect a pop in the vix. My gamma is +ve, so I am bleeding theta as when it does not drop.

    If one was to look at 2015 June 24 and July 20, this is similar. Seems that these big move during this season is normal. But then look at 8/18/2015 and 7/29/2014! Trades need to be able to handle these moves.
     
    Last edited: Jul 15, 2016
  4. Marcas

    Marcas Well-Known Member

    Hi Teddy,
    I'm not familiar with Taylor expansion but I understand what you are taking about. For the way I'm trading now volatility isn't that important.
    I'm digesting all info posted on this forum and trying to "get the feeling" of presented trades - if you know what I'm talking about :) - to see if I will be comfortable with it.
    Market. I'm afraid of big short spikes to upside which are possible (earnings for example) and then I will have no choice but to adjust what means staying longer in trades. I dont want that. Having negative theta is no, no for me now, luckily I'm not there yet. Generally I expect move down midterm. How big it will be - no idea - I'm open (short call spreads). Long term? up or down... doesn't really matter to my trades. For other reasons I would prefer drifting down for longer period of time.
     
  5. status1

    status1 Well-Known Member

    It seems like a lot of traders and their strategies including myself got caught off guard by this recent move up on basically no real news
    I understand that initially traders were betting against Brexit and they quickly had to reverse their trades which sent the market down than after they stopped panicking the market went back to where it started. Then, for no apparent reason, it continued to move sharply higher. Maybe that was just additional investors that got in at the bottom in addition to those that had to reverse again as the market went up
    So what happens now ?
    It seems to me that the market is overbought in the short term so my guess is it will go sideways or down from here. It probably would have gone down some more on Friday if the news about Turkey would have come out earlier in the trade. Personally, I am looking at the gap at 2036 to 2042 to be filled. Then after that it can go higher.
    That would also be a good opportunity to get out of my trade with a little profit, but with my luck and Murphy's law, that may not happen until after the August expiration which is where my current trade expires
     
  6. Paul Demers

    Paul Demers Well-Known Member

  7. Teddy

    Teddy Well-Known Member

    I saw the Japanese election news and hope of printing more money. I'm skeptical about that because Japan doesn't seem to deliver. There is something about the cabinet that makes getting it approved a bit difficult. Besides, I don't know where they would put the money (stock market?). The last time I was there doing audit, it seems that that there isn't that fighting spirit that I see in other places. The culture is appears quite risk adverse and the Japanese do admit that there is an island mentality.
    ......na, it will fail. Interest rates have been zero for years. It is mostly controlled by large corporations which already get cheap money. There are already too many lovely bridges that few people use there. They even tried to get overseas money to invest in their real estate (not working). And I doubt they will invest it in China given their relationship.

    And today there was the failed attempt to take the government down in Turkey.

    I figured that anyone hoping that it falls will have to take some pain first. So I figured a 150% fib from the Brexit low might take us to SPX 2181 or 127 fib from the Feb low to 2177. Don't even know if Fibs really work as it fails so often. My silly logic is: IT CAN'T GO ANY HIGHER!!!! ....which is probably will and I will have to move my delta a bit more +ve in case.

    I would think that July 21 start a horrible down move.

    Did some bracket analysis and this this does seem to be a cyclical high period. And seeing "around" mid August to be the earliest period of some big correction. Folks just have to be read y for some possible move that is quite substantial (10%+ down move). Gees, that would be big.....1960.and happens to be a 38% fib. Of course that is my opinion.

    This week depends on earnings from IBM, NFLX, GS, MSFT.

    But what do I know, I'll have to adjust my deltas more +ve in case. It can't keep going higher!!!!!! :eek:
     
    Last edited: Jul 17, 2016
  8. status1

    status1 Well-Known Member

    If I missed the news on Monday I guess the S&P was not impressed either
    The big move that I saw was on 6/28 when it gaped open and again on 7/8 when it went above the most recent high from 6/8 after that it was just follow though and piling on to break the record high
    A pull back about now would be nice for my trade as long as I can get off at some point
    Of course the big correction will come around mid August meaning August 19 right after the expiration so I can take the max loss and of course if I adjust the trade now the correction will come right after that
    I guess I will take it one day at a time and see what happens and adjust accordingly
     
  9. Teddy

    Teddy Well-Known Member

    Can't you roll out the tested side for more credit? ie roll it out to the Sep expiration?

    Do keep in mind that it does increase the risk. I heard that Karen Supertrader got in trouble by doing this.
     
    Last edited: Jul 18, 2016
  10. Teddy

    Teddy Well-Known Member

    I am going after a pop volatility and as it moves up have to increase my delta. I'm just hoping for some big 2,3,4 SD drop in the market.
     
  11. Tps

    Tps Guest

    maybe the best piece of advice i received from SOM was trade the trade and not the market. We ultimately have no idea what the market is going to do tomorrow - no sense in trading on your gut, or what you think might happen. Trade your plan, and over time things will workout.
     
    Meathead likes this.
  12. status1

    status1 Well-Known Member

    It's a little bit more complicated to roll out a butterfly since I have to keep in mind the margin and also the additional risk but it may come to that I want to burn off some more theta before I roll it
    I want to see what happens after the first week in August If it's still in this range I will have to roll it
    I was trading my trade unfortunately the market had some other ideas so I had to adjust for it
     
  13. Teddy

    Teddy Well-Known Member

    I guess one has to give it a few days. The vix July options only have two days left and the vix term structure looks quite interesting.
     
  14. Marcas

    Marcas Well-Known Member

    One can give it few days if one has few day to give.
    I can give it one day, one and a half max... unfortunately...
     
  15. Teddy

    Teddy Well-Known Member

    Sorry to hear that.
     
  16. Marcas

    Marcas Well-Known Member

    Hey, it's not that bad. First of all I trade this this way and it is not new to me second I had some relief today, third I blinked (with one eye) today and rolled half of assaulted positions (in worst possible moment, of course). Let's see what tomorrow brings.. Big problems start if we have sharp move up not likely, but you never know...
     

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