Close: SPX Best (17JUN) - a nice recovery trade!
Trade Rationale: Close 7 Jun
I decided to close this trade, capturing nice profits, despite the big drawdown this trade had a few weeks ago. I am using the free capital to open a new Best Trade for August. Theta was highly attractive and we could let the trade open a few more days; but, the market could move fast to any side and it is better to change this trade with another in a higher timeframe to decrease its Gamma (and Directional) risks.
Final position:
The trade delivered a profit of above $500.
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Trade Rationale: Adjust 1 Jun
As the new SPX trade opened (July), I decided to adjust this trade to prevent any potential loss in case the market breaks the strong resistance at the 4150 region. Also this move “softened” the position Delta and now we have a lower risk to the upside. Meanwhile, the trade is recovering from its drawdown and now presents a small profit.
Position status:
The trade is recovering from its drawdown and presents a small profit.
Profit target:
Let's increase the PT to $250.
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Trade Rationale: Adjust 26 May
The SPX moved up strongly and closed about +2%. During the last trading hours, the Best Trade became with too high negative Delta (circa -5). I decided to be conservative and lower this directional risk and move up the soft hedge (or the sold Put Vertical). I bought back for a profit the Vertical we opened on 12May and open a new one at higher strikes. This adjustment lowered the trade Delta to about -1 and increased its Theta. We are now better protected in case the market continues its move up tomorrow. I think we should continue to be with negative Delta bias in case the SPX does not break the 4100 level.
Position status:
The trade is recovering from its drawdown.
Profit target:
Let's reduce the PT to 0.
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Trade Rationale: Adjust 12 May
The SPX was most of the day in a strong down move. During this period I decided to add negative Delta to the trade and increase its Theta. I increased the width of the upper butterfly leg to capture more premium. For the last session minutes, the SPX started to recover and I added a short Put Vertical at a lower strong support (3700). This Vertical added a positive Delta, although the total structure trade continued with a small negative Delta. But, it also added additional Theta and capture more premium. I decided to add this Vertical to capture the high premium of this high IV environment. In case the market starts to recover it will deliver fast profits and tend to flatten t0 line.
Position status:
The trade recovered from its drawdown.
Profit target:
Let's reduce the PT to 0.
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Trade Rationale: Adjust 9 May
The SPX Moved again down very fast. This penalized the trade and the total Delta became too positive. Therefore we need to adjust. I decided to remove the upper soft hedge Vertical (keeping its profits) and invert the Butterfly structure to be Delta negative. The market may continue to move down and it is better to have this bias that also protects against IV increases.
Position status:
The trade suffered again.
Profit target:
Let's reduce the PT to 0.