Intuition solves the NDX trade; "trade small, trade often" for real this time

As I mentioned last month, it wasn't clear to me when I should put on the once-a-month NDX trade ... so on Thursday I was waiting and watching and it just struck me just before 11am PDT that it should work at that point. So I pulled the trigger, selling an iron condor (7770 short calls, 7650 short puts, 50-point-wide wings) for $6.11 credit.

It expired worthless the next a.m. as I'd intended ... so instead of being mechanical on this one I think I'm just going to let my intuitive impression pick the time ... and possibly stay out completely if it doesn't smell right.

But that next trial isn't for another month ...

So in the interim to keep the Trump/Powell circus from having such an effect on results, I'm diversifying into a wide list of underlyings from the Tastytrade list ... I put on a bunch of these Friday near the close and am going to add to about 50% of the account on Monday.

More next week!

No mistakes this week but annoying market continues; hope in Fed meeting?

I didn't make any goofs like last week, but the market continued Way Too Up for my short SPX call spread and SPY butterfly.

The short call strike on my SPX iron condor is at 2870 ...

This all started when the market interpreted remarks by Jerome Powell and other Fed Governors that they were ready to cut rates.

But there are plenty of dissenters with this view ... I mean, rates are still at rock bottom in historical terms ... And in any event the market has been very poor at predicting interest rates.

So: hope springs eternal for the S&P 500 trades. Otherwise I have on: TSLA, LYFT, QQQ and IWM ... all of which are showing profits but TSLA, and it's still $10+ below the short strike at $225. So I have expectation that all of these will come in for full profit (25% of butterfly credits, 50% of Iron Condors) over the next week or so.

I'll send another update then ...

A deeply annoying week made worse by a couple of mistakes I made

The only good thing I can say about this past week is that I wasn't short S&P futures:

Although this move wasn't kind to my neutral trades, of course ... I am short the 2870 SPX call expiring July 3, so I have hope of that trade coming back into profitability and bringing my butterflies (in SPY and QQQ -- IWM is OK) back with it ..

The two mistakes I made this week to exacerbate things were both earnings-related. First:

I meant to trade Salesforce (CRM) for its earnings after the Tuesday close, but instead I traded Chipotle (CMG) ... expiring today, June 7.

I noticed this the next morning, of course, and figured: what the heck, even though I gave up 4-day trades it should still work, right? Wrong:

Finally, Beyond Meat had earnings and I made two mistakes on this one. I forgot again that anything can happen any time and made the mistake I've been most prone to "it couldn't go up from here, right?" In this case, the money-losing stock market darling of late.

It turns out nothing I did would have worked, but I didn't even sell both sides ... just the short call spread, just outside the $12 expected move. Instead it went up $20 and then $30 ... And I was taking too much risk, almost $900 ... actually got out for about a $730 loss on this one:

Anyway, Trump announced late today what the market already figured out: no extra Mexican tariffs on Monday. But I hope that's a "sell the news" indicator:

More next week ...

I gave up on being short too early!

I have been trading "neutral" trades that pay off when the market stays within a certain range for the selected period:

But Mr. Anti-Neutral came back with his latest wacky tariff proposal this week:

And the market responded as though it wasn't thrilled:

I've been using about 30 days for these neutral trades and that will be about 1/2 over tomorrow.
Tastytrade research has been promoting the idea of "rolling" (closing and reopening further out in time) these trades, profit or loss after half the time is gone. Right now (based on the futures prices Sunday evening PDT as I'm writing this that I will be showing losses in all of my neutral trades as of tomorrow a.m. ... but I'm going to close them and reestablish in either event.

Also this past week: 3 winning earnings trades (all "defined risk" Iron Condors):

Good news in an otherwise annoying week.

More next week!

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 ...