I just made a trade that I
thought would interest readers of this blog.
My position was short in a rising
market and I decided to move the position, just to be certain that nothing
horrible happens to me. It’s a trade I would
never make – unless I thought it necessary. But I was outside my comfort zone and becoming nervous about my
prospects. I’d like to believe the market
will turn around and head lower, making these trades unnecessary, but I have no
idea what lies ahead. Hence the
I was short the RUT Sep
740/750 call spread. I had already
bought in the put side of the iron condor when it reached 30 cents.
With RUT trading in the 732
to 733 range, I repurchased this call spread. Earlier, I decided what to do if I pulled the trigger on the call spread
and did not have to spend additional time making a decision. I moved the position out to December. My alternatives using October options were unappealing,
and rather than wait more than one week for the November options to appear (as
they will, after the August options expire), I decided to trade Decembers
I bought a December RUT iron
condor (same quantity as the number of September call spreads I bought).
the Dec 620/610 put spread
the Dec 800/810 call spread
I paid a small debit to make
this trade, but was anxious to reduce my immediate risk and probably could have
done a bit better on the prices. All in
all, I’m unhappy to lock in the loss on my September position, but my portfolio
is considerably safer, and proper risk management is the name of the game.
I really do practice what I
If you’ve had a similar
experience, feel free to share it.