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Let’s do a quick update before market opens.

In the last post, I mentioned "the Jan 28 and Feb 9 double-top forms the next resistance in the 870 area". Yesterday’s big drop shows that the overbought market has decided to that a breather (more like a big sigh!).

Our positions are looking a lot better after that drop. Going into last weekend, the delta of the bear call (940/965) closed at 18 and the spread price was marked at 3.30. While it did not trigger our adjustment, I was already looking for adjustment candidates on Sunday evening. The drop has brought delta to a safe 7 and price of the spread to 1.20. Recall we sold our 940/965 at $2.00 per spread (see post).

The Bull Put Spreads are also looking good. The 655/630 BPS are currently marked at 0.35. Recall we sold each spread at $1.90.

Next update will hopefully see both sides closed.

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Just a quick note to say that ‘Yes, I am alive!’

Also, an apology to the regular readers for the sudden 6 months sabbathical. It has been a rather eventful 6 months for me. 4 of those months were spent conducting courses for a group of private investors-turned-traders.

I have kept those in my mail-list informed of all the positions taken these few months. I will also begin posting trades here, now that I have a bit more time.

Here are the trades taken last week:

SPX May 655/630 Bull Put Spread for $1.90
SPX May 940/965 Bear Call Spread for $2.00

Risk Profile

With Friday’s close at 842, the short call of our Bear Call Spread has reached a delta of 18. The SPX is now overbought. But as most of us know, it can remain overbought for a while more. The down slope trendline offers the 1st resistance at 852 while the Jan 28 and Feb 9 double-top forms the next resistance in the 870 area. With ADX  falling to the 20s, the uptrend may end at either of the 2 resistances. Presently, I am not too worried.

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