JuneWk2 - SPY Market Summary

JuneWk2 - SPY Market Summary - What a difference a day makes! The SPY has gone from bullish to negative. Is this going to be the end of the bull run that we have been waiting for? Well, who knows. But from the looks of it, it would take a lot more tweaking by the powers that be to ensure that the bull run continues.

Do I really care? Not really. I only care if I make a losing trade. That's about it. Whether the market goes up or down is really immaterial to me. I trade weekly options, and my risk is limited to a weekly reality. My loss is also limited as well, and every week, I have an opportunity to make money. Of course, the reverse is also true.

Last night was such a night for me. I sold a trade that was too dangerous, and honestly, it was unnecessary for me to take that kind of risk. But it was a good learning lesson for me.

I sold SPY Put Spread $162/163 for a premium of 11 cents. It was one of the riskiest trades I have embarked on. To be on the safe side, I placed an auto-cut loss mechanism should price were to cut below $163.10. Last night was one such night. The SPY in fact cut below the strike price of $163. Needless to say it triggered the auto-cut loss much to my delight. Anything is better than being assigned.

A buffer of ten cents was safe enough for me to get away from the trade without feeling too burnt-out. As price approaches the strike price, the premiums also increased, and that basically accounts for the loss on the account.

I entered the trade at about after 12 midnight SG Time, and then between 1am - 2am, the trade literally went southwards. There was another trade that I could have sold, which was the $161.5/162.5 pair, but I decided that the premiums were too low for me to consider. Well, my mistake.

Loss was -18.1% based on my investment for the week. Ouch. Lesson learnt.

But the good thing is, I saw for the first time how the Contingent Order on Price works, and for that, I am happy to continue to use that cut loss mechanism. Looking forward to a profitable week JuneWk3 or Jun13.

That's all folks!