The S&P hit new all-time highs today – finally.
We had SPY calls that expired yesterday – but I let them exercise into SPY stock because I sensed that today might be a green day. For some people who didn’t have enough margin in their accounts, the SPY calls were reduced based on the amount of margin available.
But for those where margin wasn’t issue, we basically held the SPY from our entry back around 2270ES – to exit around 2305ES.
Recall that we exited half of our position for around $600 in profits – and trailed the other half into expiration. That other half made maybe $350 or so – so combined around $950. In this market environment, ES futures are a better trading vehicle than options – simply because the market is barely moving – and when that happens, time decay hurts positions.
It is for this reason, that we are simultaneously doing long calls but also bull put spreads – so that the time decay at least balances out. For example, our bull put spread from last week made $1,200. Our SPY call position would have been much larger had we been able to use futures (futures are not allowed in autotrading).
Meanwhile, today we realized about $200 on our IWM put spread – exiting half early on the way up- and it looks like we should be on track to collecting the full amount of the remaining $400.
The trade was set up for a max profit of $750 – and because we exited half at 50% max profit, we will likely be collecting $600 out of the $750 max profit at tomorrow expiration.
Also 4 of our other positions are in the green – 2 of them well into the green region – simply holding.
Wave iii should end around 2309/2310 and pullback to 2302 for a wave iv before continuing to the upside.
After breaking over 2296ES – the market proceeded to break the prior high of 2299 and follow through.
The Russell had a clear a-b-1-2-3-4-5 pattern – notice how the points between 1-3-5 forma straight line.
Yesterday on Feb 8 – it did spend a lot of time in the 1347 region – a lot lower than I had expected, but of course by today, it all reversed — the entire a-b-1-2-3-4-5 pattern reversed in a matter of a few hours.
In the previous blog entry, I noted that we retested the breakout zone in the 2265 ES region. We could come back down to teh 2279ES or 2271 region one more time before we head up to test 2300.
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