NEXT WEEK

Next week if the market is calm we can begin to enter June trades. After a month like May that was tough for many traders it can be useful to consider doing a few things more conservatively. First off, trade smaller lot sizes and less trades all together. If the market moves rapidly again it is much easier to adjust 2 or 3 trades that 7 or 8. Secondly lower your profit and max loss targets. Maybe go for 10 % profit and 15% set as max loss. It is import psychologically to get some winning trades again to help you regain confidence. Insurance also is very important, keeping the damage limited particularly on the down side with some extra puts. A few tweaks like this can go a long way. - Fenton

WHAT HAPPENED?

Volatility is the enemy of Income Spreads. After we opened our March position on Feb 11th the S&P made a whopping 78 point move over the next 28 days. We can adjust around the majority of Market moves but occasionally we hit our limit. This most often occurs to the downside but sometimes the Market can "Melt Up" as well. Our March position got caught in one of these up moves. We were left teetering at the edge of our max stop loss with the daily threat of a breakout into a blow-off rally. After a day or two of this action with no pullback in sight and Gamma sky high I decided to close the trade rather than risk going beyond our stop loss into a really ugly situation.

TRADING SYSTEM SIGNAL - CLOSE THE MARCH POSITION

We have unfortunately hit our stop probably just before this Market rally corrects. So as much as it pains me we must close the March Position.

UPDATE

Tomorrow's jobs number could be a big Market mover so in an effort to assume a more Delta neutral position we'll reverse the trade of Feb 19th.

Calendar Spread

Close- 2 Apr/Mar 116 Call Calendars for about $0.64

UPDATE

Since the Market has made a new high today we'll continue to adjust into the move.

Calendar Spread

Open - 2 Apr/Mar 116 Call Calendars for about $0.64

Calendar Spread

Close- 2 Apr/Mar 105 SPY Put Calendar for about $0.62

UPDATE

The Market has rallied above the 111 resistance area and it's time to adjust our position.

Butterfly Spread

Open - 1 Mar 110/114/118 SPY Call Butterfly for about $01.62

Calendar Spread

Close- 2 Apr/Mar 105 SPY Put Calendar for about $0.71

UPDATE

Our March position is in pretty good shape for tomorrow's GDP report. An upside surprise will require us to adjust the spreads if we close above the 111 area.