A good week: up 8% or so

Butterflies continue to pay off ...

That's IWM, SPY and QQQ ... just one-lot "iron fly" trades for the moment. Basically:

• Sell 1 put and 1 call at the money
• Buy 1 put and 1 call right at the .10 delta

... Take the trade off when you've achieved 1/4 of the credit ... in this case about $250 in SPY, $160 in QQQ, a bit over $125 for IWM. Not bad for around 8 days (typical) time in this trade.

I also have a TSLA trade on ... I skipped the main part of its recent price swoon (in my own account, though I had this on in one of my client accounts, unfortunately) after this analyst remark:

Tesla shares could drop to $10 in a worst-case scenario, Morgan Stanley says

Elon Musk says not so ... and I doubt it too. But it's below $200 and I'm willing to bet it won't go below $170 for the next 3 weeks ...

I also have a LYFT trade on that looks to be working ... LYFT just has not to swoon or soar for the next couple of weeks also.

Finally, I did one earnings trade that worked very well:

I just did a 1 standard deviation short strangle for a nice credit: $2.66 ... and I got a bonus on closing it! I had the standard 50% set for closing out price: $1.33 ... but I actually got filled at $0.95 ... more like 65% of the credit. Wahoo!

More next week ...

Excellent week ... with one glaring exception

Butterflies are beautiful ...

and profitable!

I closed profitable trades on in LYFT (again), AMZN and TSLA ...

I put on small butterfly trades in each of SPY, IWM and QQQ ... SPY and IWM each were closed out for their expected 25% of the initial credit profit within 7 days of entry of the trade. QQQ didn't quite make that, but I closed it out for a smaller profit to free up buying power for the "fabulous NDX trade" I've written about so often here.

And that turned out to be the glaring exception ... I was short the 7530 put (long the 7450 -- 80 points wide) and the NDX settlement this morning was 7511.94, damn it ... I got a $750 credit but lost then $1806 ... so net loss $1056 ... but since the possible loss was $7250, not too bad (only 14.56% of the amount I could have lost).

Two nuances of the NDX trade:

• At low volatility (like today) the short strikes aren't nearly as wide as they are as when volatility is higher.
• I put this one on just before 10am again, the way I had done consistently until the big loss several months ago. This one wasn't all the same: no monotonic up move all day, in fact down from 7600 or so when I put the trade on to 7580 at Thursday's close ...  and if I'd waited until then I'd probably been short the 7510 puts and made full profit.  I guess I'll have to move the trade time up nearer the close for next time ...

The 7511 settlement value was a shock, but showed weakness that further erupted Friday in the Nasdaq:

I'm going to put on the 3 butterflies again Monday a.m. ... More next week!

/ES futures cooperate (so I closed them out); earnings were not the whole thing, it turns out

Just when you think the /ES futures will go up forever, Mr. Trump steps in to knock them down:

Trade wars "good and easy to win?" Not so much

This returned volatility to the /ES futures and the market as a whole:

Back to the earnings discussion ... I was planning to do a lot more earnings trading, but I looked at the ones available two weeks ago and planned out my day on that Monday (April 29, I think it was) ... and even if I'd won them all I'd have made like $170 or so ... while risking at least $500 on every trade. So one loss could kill the whole day.

I went back and watched the "rising star" I had seen talking about this and I had missed 1/2 the discussion ... he said he wasn't trading just earnings but "moving toward indexes" ... sheesh.

I've had good success trading SPX butterflies in the past, so going smaller this time I've been using SPY, IWM and QQQ ... all with one-lot butterflies.

With the pop in volatility we got, this makes a huge difference in the credit we get for this butterfly trade:

              May 24                 June 7

QQQ        $5.12                  $8.46            +65.2%
IWM        $4.15                  $7.18            +73.0%
SPY         $5.70                  $11.37          +99.4%

Total risk on the SPY trade is about $1200, so if we take 1/4 of this credit, that's a 23% return ... in about 8 days (typically ... if we put these on with around 30 DTE, then 1/4 of the credit expires in about 1/4 of that time) ...

I actually closed the first set of these for small losses $100-$200 each, with about 15 days left in them ... Tastytrade's research shows that this is better than hanging on to see if such a trade will come back, and in this case the increased volatility seems to fully justify that.

I also am trading some other volatile underlyings:

More next week ...