Looking good.... time is on my side

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I.m still in the trade, I have another 8 days to expiry of the Russell 2000 April options. Both of my options strikes puts and calls are around 100 points away from the current price. Usually I would close both orders but we only have another 5 trading days if you consider the bank holidays and weekend.

I've put up 2 charts line and candle. We are not out of the woods yet, the momentum has fallen off causing a negative divergence, which is pulling the price down. If the price closes below the MA20 (purple) we should see a fall back to 385 support taken from a previous low.

Good breakout

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A quick update. The market seems to be breaking out and enjoying a rally. My positions are still in tact. As we speak, 4:30pm GMT, RUT is above the blue trend line 443, if it can close above it we have could have another run up to the red line. This is the 78% Fib retracement level. I've taken of the grid to make it easire to read. I've also placed to charts side by side to make it easy to read. One line chart and one candle chart.

I am waiting for a touch and possible reversal or pull back of the 78% mark before I close out my Call options. I do not want to risk being exercised. That's it for now.

Going well

So far the strategy is going well. Last Thursday I placed the second wing of the trade by entering the April 520/30 calls spread with a limit of $0.40 per contract. If all goes well and RUT ranges between 520 and 330 then I should be able to net $0.85 per contract.

I have a range of 190 points and there is 17 days left to expiration. As I write RUT is down 17 while the DOW is down 290 points, I sense a bit of profit taking.

I expect RUT to pull back to it's 20 MA which is around the 385 mark, see last chart posted on 24 March. Dow has support around 7250 and spx around 750.

Caution, the martket is still in a downtrend, it needs to peak above the last significant high and and a higher low before we can retore confidence in the market.

I'll be talking more about the VIX soon, for now thats all.

Now it's sit and wait.

RUT Puts

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RUT (Russell 2000) more or less replicates the SPX. RUT has not broken or closed above the ceiling resistance of 440 yet!

It also currently stands at 424 just on the open. The 320/330 puts look interesting with a decent credit. I've placed for a limit credit of $0.45 per contract.

Why? with the weekly MACD indicating a bullish move I don't expect the price to collapse down to the last low of 343 before April expiration.

Filled, $0.45 per contract.

Breakthrough, will it hold?

Action: Sell PUT credit spreads in a bullish market. Below 590 (127% fib Extension). Also sell calls when price reaches 884 (78% fib retracement).


The fact that SPX has closed above the down trend line I expect a rally up towards the second down trend line on the daily chart above. The weekly chart shows MACD divergence which is still the main indicator for a bullish move.

Getting ready again...

Looking at the weekly chart we still have a few points to rise. I expect a slight pull back abut entering a credit call spread now would be pre-mature. We have a HL on MACD indicating another push to the downtrend line and MA20, which is around 845. It's now sitting at previous support turned into resistance. I Hope nothing just watching price action and trading what I see. It's also at 50% Fib retracement.

Out with 4.6% in a week!

I'm out of the trade. The market had risen enough and I saw an opportunity to get out with a decent return. Rather than wait for the contracts to expire worthless over a month, I got out reducing my exposure to volatile moves.

I originally entered the trade on 9th March for a credit of $1.10 per contract and closed my position today for $0.40 per contract. That gave me a profit of $0.70 per contract in a week. On margin of $1,500 per contract that gives me a return of 4.6% on capital invested, excluding brokerage costs.

I am still waiting to enter the call credit spread once the market is high enough. Watch this space.