Up, Down, and Back Again...

PORTFOLIO GREEKS
(SPX beta-weighted)
Delta: 27.7
Gamma: 1.9
Theta: -119
Vega: 457
"Paper-folio" Value: $141,525

Up, Down and Back Again--for the S&P that is... The portfolio did nothing but go straight up this month. Love that! Made a sweet 5.5% net after all commish.

The S&P ended the month just about where it started the month eventhough it bounced around all over the place for 29 days in between! (See right-hand portion of chart.) After the first week of July the S&P sold off hard into the end of week 2, then it did a typical V-return to high manuever--it's really surprising how often stocks/indexes retest the old breakdown price level after reaching a short-term maximum level of "oversold-ness", but it happens consistently time and again. Also, interesting to note is how, once again (no surprise again either) that the chart held up its symettrics.

Many times if something sells off, for say 2 weeks, then it will take an equivalent time (2 weeks) to retest the high that it broke down from, forming a very symmetric looking chart--and is where the name "V-bottom" comes from. People consistently think this stuff is random, voodoo, mumbo jumbo. Hardly, it occurs time and time again and is really just a consequence of traders fear and greed acting out in equal and opposite directions. At the very least, I always expect at least a 50-60% retracement in a very short time period--again ONLY after a max oversold reading occurs on my oscillator) Sometimes if it's a real hard and and deep move down, it will take about 30% longer in time for the move up to retest the old breakdown point, making the right side of the "V" a little longer than the left side. I love how the psychology of market participants reeks of Newtonian Physics at times--namely how fear and greed often result in equivalent moves in opposite directions after having reached their illogical extremes! And this reason, to a certain extent, is why the market is so easily gameable especially at particular points in time AND price. Ok, enough of the philosophical digression...

Today, July 31, I basically closed out every one of my short options today, as well as some of the long options that were worth over .75

The paper-folio made a decent killing this month--netting over 5% profit--eventhough I didn't trade much, and tied up less than 30% of my portfolio in margin the whole time--the other 70%just sat in cash mostly. The options positions I had going into the month with good vega and theta across the backmonths did a great job of dampening the delta-neutral portfolio's volatility during the mid-month roller coaster ride. From what I can recall the portfolio only had 2 or 3 losing days, and the rest of the days were at least slightly profitable. Today it even made $695 dollars profit! Options Rule!

I'm OK staying out of any positions ahead of the Fed meeting next week--no sense trying to gamble on that. I may buy some butterflies way outta the money a day or two ahead of the meeting in order to catch a quick double if volatility picks up again and the S&P breaks out of its range either up or down. Other than that, I'm content to sit on the sidelines, and just earn some good interest on this huge cash position I have now of about $140,000 bucks.

The greeks shown above are purely the aggregate total of the remaining long options that are way OTM that I'm willing to let ride--Each contract is worth less tha .60, amounting to no more than 1% of my total portfolio's value at this point. If we catch a big move off the Fed next week, these could actually pay off pretty big for the little actual dollar amount I have at risk in them.

Tomorrow is Aug 1, which means I get a nice credit to my account with all the interest I earned in July. This should tack on a few hundred bucks because of how nicely the paper-folio has grown. I'll take it--better than a sharp stick in the eye! And definitely better than gambling on all the Fed shenanigans that are sure to ensue pretty soon!