Engine room...more steam!
Ain't no sunshine when she's gone.
It's not warm when she's away.
Ain't no sunshine when she's gone
And she's always gone too long
Anytime she goes away.
I'll tell ya, it's a real talent cutting steak with a plastic knife while staring at my S&P chart, watching the stochastics, having a conversation, listening to the television, reprimanding Frokker, thinking about my risk, synthesizing the metrics and crafting a thesis. I mean, how the heck am I supposed to focus on the creamed spinach!?!
First things first- The buyer in the S&P blinked and the downside gap (from Tuesday's opening) has begun to fill. All eyes are now on S&P 836 (and NDX 990, if and when) as levels that MUST hold if the bulls are gonna giggle into the weekend. I'll tell ya one thing--it's a battle of epic proportions out there and neither camp wants to lose this one.
These types of slow grinds are great if you're Sammy the snake but they're painful if you're luggin' front month premium (options). I've been eyeing my February puts all day and they're one rally away from having the life sucked out of them. Still, it's a tremendous real-time example of theta (time decay) and if you can learn from these trades, I'm happy to share them.
Yesterday I legged into some March puts (with hopes off making sales in the Febs) and, as I weigh what I'm gonna do on the "front months," I've made a small, disciplined sale on the March's. I've still got inventory, mind you, but if I didn't make a sale and the market popped, I'd get double whammied. I still may get single whammied, mind you, but at least I've locked in "some" profit.
Yes, I know that a lot of this option chatter is over many of your heads and I'm sorry 'bout that. Minyanville is a diverse community with a wide range of skillsets. I try to mix the basic stuff with the more advanced discourse such that everyone has something to read. When the University opens, we'll have a structured curriculum that will allow you to access material particular to your situation. Until then, my friends, I'm jugglin' critters of all ages!
Anyway, back at the ranch, the mind grind continues and it's put up or shut up time for Snapper. I'm stickin' with my bearish imagery for now but, even so, I'm acutely aware of the terrible tortoise and his penchant for surprise. Expiration (negative gamma) is a whippy and trippy environment and while I'm more in the S&P 825 camp (first stop), I'm respectful of the upside jig as well (S&P 850).
I'm gonna hop and get this to you in a timely fashion and we'll circle back in a bit with a trading radar of what's to come. Deep breaths, cookiepuss, we're almost there. When the chips are down and your stress is up, just remember--you're a Mellon!
Todd Harrison is the founder and Chief Executive Officer of Minyanville. Prior to his current role, Mr. Harrison was President and head trader at a $400 million dollar New York-based hedge fund. Todd welcomes your comments and/or feedback at firstname.lastname@example.org.
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