I apologize for the light blogging this week... I've been traveling and very busy. In any case, that's why I'm a SnapTrader. I don't have a lot of time to manage trades so I've made an effort to design a trading plan that requires very little attention. The currently featured calendar trade for June expiration is a great example of that.
So far this trade has required virtually zero management. In fact, it hasn't even really been close to needing an adjustment. As you can see by the latest P&L graph, we're showing a decent profit for the month... about 8%. Given the massive fall in volatility this isn't a bad showing. I will likely look to exit this coming week unless we see a change. With slippage we can probably get out with about a 6-7% gain. I'm okay with that, For what turned out to be a less than ideal month.
As I mentioned, implied volatility has really plummeted. You might remember that I suggested(uh, hoped) that the RVX - the index tracking implied volatility for the RUT - may be finding a new trading range. Today it looks like, while it's still in my suggested range, it's threatening to continue lower. There are so many reasons to think it should head back up, but as they say... it is what it is. And here's what it is right now:
As I say, there are many reasons to think that the fear driving IV should be significant enough to drive it back up. Perhaps it will... this will be an interesting week to come. Either the RVX further establishes this range or it breaks into the mid-30's. So what do we do with this information? I will use this to establish trades for the July expiration. If it heads lower immediately I will likely enter my Condor on Monday or Tuesday. If not, I will assume we're still in this range and wait for a retracement of IV to enter the Condor. More rationale for that coming in a future post.
Good Trading...
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