That was my tweet today at exactly 9.30am New York time. The infamous Opening Bell.There we go folks, see you in hell !!! It was a great life here on Earth!!— The Lazy Trader (@lazytrading) August 24, 2015
I defended my two September positions as I said I would in the Defending Positions article on Friday
I'll just go over my plays as I published them on Twitter:
Got out of September $RUT 1050/1060 Credit Put spread for 2.20 debit. Loss here as expected. Now on to $SPX— The Lazy Trader (@lazytrading) August 24, 2015
Finally filled on $RUT 900/910 Credit Put spread for 0.60 cents. September options.— The Lazy Trader (@lazytrading) August 24, 2015
Out of $SPX September 1820/1825 Credit Put spread for 1.30 debit. Again, loss as expected here. Now looking to deploy in the 1600 area.— The Lazy Trader (@lazytrading) August 24, 2015
I also bought a December SPY 213 Call for 0.87 debit. Pure directional speculative play with very low risk.Sold $SPX 1650/1675 September Credit Put spread for 1.50 credit. Same as selling a 5 point wide for 0.30 credit.— The Lazy Trader (@lazytrading) August 24, 2015
As a result, these are my current positions:
September Positions (24 days to expiration)
RUT 900/910/1330/1340 unbalanced Iron Condor
SPX 1650/1675 credit Put spread
Rather than getting into all sorts of mathematical equations about my September losses, I will simply reflect final numbers here. You can always check out the track record for more details. These are the losses so far in the September expiration cycle:
And this is the credit collected in the existing September positions:
$75 RUT 1330/1340 Credit Call spread
$120 RUT 900/910 Credit Put spread
$150 SPX 1650/1675 Credit Put spread
Assuming that these September positions are successful in 24 days, the final result for the Model Portfolio in September would be:
+75 + 120 + 150 - 272 - 320 - 400 = -$647
That is a -5.42% draw-down on a starting balance of $11,928 which represented the +19.28% return of the portfolio at August expiration. Of course commissions also have to be taken into account, so the performance of the portfolio at September expiration would be +12.41% for the year. Again this is assuming that the current September positions expire as they are. For all the details of my September activity including links to the articles where each position was discussed visit the Track Record page
October Positions (52 days to expiration)
SPX 1700/1710/2195/2200 unbalanced Iron Condor.
I didn't have to trade any October position today.
December Positions (117 days to expiration)
SPY 213 Call.
Just a simple Out of the money Call. Sure, prices of options were inflated due to the high implied volatility but that is by far more exaggerated on the Put side. This is a pure lotto play betting on a rebound. I will not manage this trade. It can go to zero for all I care because it is less than 1% of the portfolio at risk. I'm looking to double or triple the debit I paid in order to get out. I don't need for SPY to rally up to 213. I just need it to rally enough so that I get some decent gain in the next 4 months. Just speculating on a meaningful rebound in a very oversold environment.
Events like today DO NOT HAPPEN that often. This is simply the price of doing business attempting to obtain out-sized returns on your money. Any strategy that attempts to obtain 20% yearly returns, 30% yearly returns comes with added risk. There is just no way around that. For the type of move that we just had, I am proud to limit the portfolio draw-down to no more than 6%. (Again, assuming we don't get another crash in the next 3 weeks).