RUT Weekly Calendar Trade #4 (Part 1)

I opened my fourth weekly calendar trade Tuesday morning (5/5/15) at the 1230 strike. This was a big down day for the market. I placed my original order around 9:45 AM for a 1235 put calendar. The market was quickly down to 1230 and I lowered the strike. I got filled about 10 minutes later with the market down to 1226 and I had caved a nickel to get that done (it filled 0.05 better than the then mark).

Before the day was out, the market had bottomed out near 1211! My downside breakeven was around 1205 and I had an alert in at 1208 to adjust. This time, I figured if an adjustment point was hit on the very first day then I would just exit the trade for a loss rather than trying adjusting and quite possibly being at max loss after the adjustment.

Psychologically, I was in no shape to adjust this trade anyway. My expectations are to average about +2% per week on this trade. In three weeks, I’ve lost 21%, made 10%, and lost 19%. I therefore expect to be “due” [it must be bad karma to even think that much less write it or say it] for a preponderance of winning trades to improve that average. We have possibly been through a very volatile time in the market recently: something that does happen every now and then.

With the market closing Tuesday at 1215, I survived Day 1.

Day 2 was mostly higher, which made for an easier day to hold the trade and watch paint dry. The market bottomed at 1211 on this day and it closed near 1220. The trade was down about $58 at the close, which was frustrating, but I felt comfortable being 10 points from the downside breakeven and still having 10 points of upside until I hit the short strike. The upside adjustment point was still over 20 points away.

I will conclude this trade summary in the next post.