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Burying the Hatchet


Some days you're gonna be the windshield, other days you're gonna be the gnat.

"I thought you might like to join us for some ice cream. Maybe your Bug here can join us. We can talk about burying the hatchet. You know what a hatchet is, don't you, Bug?"

-Uncle Buck

A new month recently arrived and with it, fresh inflows of cash hit trading desks around the Street. That was the party line yesterday, as reasons were assigned to the upside rhyme. Following a long holiday weekend, I wasn't particularly prepped for the jiggy pep as, consistent with my recent musings, I was long individual situations with a slug of index puts against 'em. My net posture was skewed slightly short, albeit with positive gamma. Still, with the VXO off double digits and my names lagging the broader tape, it wasn't one of my better trading days.

Some days you're gonna be the windshield, other days you're gonna be the gnat.

Following a particularly brutal session with my trainer this morning, I arrived at my turret to find that the fifteen captive Brits were "pardoned" by Iranian President Ahmadinejad. That immediately hit crude and lent a bid to the S&P futures, both of which were pricing in the incremental potential for an escalation in the region. That "gift," as the release was termed, is a positive development although it's far from a Mid East panacea. There's still strife, there's still war and there's still risk. The timing-or the perception of necessary risk premium-remains the task at hand for traders paid to assess such things.

For my part, and as a function of the resistance zone in the S&P we've been monitoring, I added further index puts into the lift late yesterday. Again, I'm not swinging for the fences but I wanna continue to accumulate paper (read: puts) given the drubbing in volatility and within the context of defined risk. I'm aware and respectful of the action, including all-time highs in China, and will be watching GS $210 (near-term resistance), market breadth (when skewed 2:1 either way), emerging markets, the dollar and crude (tension proxy) as we edge into the Thursday dew.

Good luck today.
Positions in SPX, Financials

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

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