As noted on StockTwits, I closed my speculative Oct 29 call position in $SLV position prior to the close for a very nice gain (selling at an average of 3.47 from 2.75 for a 26% gain in 2 days). I went to bed last night with Silver futures up pretty strong and woke up a few times last night thinking about what I was going to do if certain events were going to take place…namely a big drop. I find that if I’m waking up in the middle of the night thinking about a position, I need to lighten up.
I was in this one to play the bounce…I got a great fill at 3.90 right after the open and took that money and ran with it on a 1/3 of my position. I sold two other times throughout the day at 3.25 to lock in a nice winner.
What I really wanted to write about is the start of a new short position. I have been buying ITM puts on stocks in beat down industries on the last two market rallies that I discussed in this post. This time I just decided to try for the weakest of the major market ETF proxies, namely $IWM. Sure, small caps were up big today, but that was not the kind of finish that is indicative of a healthy market.
I purchased a partial position of Oct 68 puts at 3.33.
Depending on what happens tomorrow, I will either add another layer of risk (if we bounce around the range we were in today), let it ride with what I have (the market drops and doesn’t look back) or get the hell out (the market shows strength and doesn’t fade).
Almost all of my buys come right at the close, as I like to see what the candle looks like for that day. This decision is based purely on experience and personal preference…I can understand the price action much better at the end of the day than at the start or in the middle.
I’ll sell almost any time throughout the day…I like locking in profits on options…time is a killer.