Market Pullback Provides Call Spread Profits And Iron Butterfly Spread Closing

Good lord that was a long "short" trading week. I will keep today's update short to get everyone their weekend asap....so here goes:

 

**The Jobs reports sucked today; especially if you were hoping for QE3. The 80k number was under expectations of 90k which made it just bad enough to disappoint, especially after ADP's report earlier in the week, but just good enough to most keep QE off the table for the short term.

 

**The Monthly Trading Service opened a RUT Call Credit Spread yesterday and was able to close that trade today for for 60% of the maximum profit. It was a great 1 day trade yielding +6.67%! Closing early got us out with 2 full weeks left until July options expiration.

 

Take the money and run!! YeeHaw! Sorry, got a little carried away there

 

**The Weekly Trading Service closed the SPY Iron Butterfly for a manageable loss today. This was like getting a gift (weird to say about a loss, I know) because just yesterday this trade was facing a potentially huge loss and would have required a roll which would have not necessarily mitigated risk, but only bought time. We definitely did not want to roll out the exposure of this position considering its proximity to the market. Fortunately, our analysis of the stretched market rally and Jobs Report expectations was spot on and allowed us to get out of the trade with our hides.

 

Speaking of the Weekly Trading Service, we are going to pull way back on selling as many credit spread scalps as the market has changed. Volatility is low (from an option premium perspective) and headline risk, and the resulting market volatility, has been eating our lunch on the scalp trades lately. Weekly spreads are very Gamma sensitive and credit scalping is not working in this environment like it has for years.

 

More details will be released later regarding the tweak to the Weekly Trading Service but we are very excited about buying some debit spreads in this low volatility-premium environment and have done quite well with the strategy lately.

 

Thanks to you all and have a great weekend!!!