As communicated Friday and again below, this is a good area to add to some of the current positions by purchasing additional spreads at even better prices (larger credits received) than our original entries.
Another alternative would be purchasing additional long puts in the SPY Bear Put Debit Spread to create a ratio spread. This will result in having more long puts than short calls which will provide enhanced profits on any pullback
To remind you all that I have my own money on the line as well as that of my fund, and to provide my commitment to my strategy and comments, I executed both of the suggestions listed above on Friday. Furthermore, with the portfolio 60% invested after adding the SPX spread this week, I am looking to deploy the last trade for Feb early in the coming week on RUT or IWM.
RUT is the most overbought of the indexes and closed above its daily & weekly Bollinger Band on Friday. This sets up a couple great trading opportunities so be on the lookout for a trade this week.
This is not the time for knee jerk reactions. Don't get spooked and bail on losing positions as that simply locks in losses and eliminates the ability of those positions to recover. Option volatility's are getting whipped around and the value of our holdings are whipsawing on a hourly/daily basis. Don't let this effect your emotions and make rash decisions.
Timing- wise, our positions will benefit very quickly on any pullback. With 2 weeks left in our current options trades premiums are low. The Greeks Delta and Gamma are high due the proximity of the underlyings to our spreads. This will cause our spreads values to mirror the markets volatility more closely and recoup losses quickly on any pullback.
As stinky as it looks right now, this is actually a good place to be, under the circumstances, as we will benefit from pullbacks immediately and at a fast pace which will help reduce the current losses reflected.
Adjustments to all the positions are still available with no cost to profitability and that is a very important thing.
The SPY Bear Put Debit Spread is in good shape as in spite of Friday's rally, the SPY remains below the break-even level of the spread. Any consolidation or pullback will be reflected immediately in the position. Ample adjustment opportunities exist as well.
The SPX Bear Call Credit Spread is in good shape as well so there is nothing to do or worry about with the position right now.
The QQQ Bear Call Spread is the ugliest of the positions right now. Roll adjustments are still available at no cost and with the Q's closing above their daily and weekly Bollinger Band, not to mention the RSI, Williams %R and air pockets down to the short term moving averages, the crazy Q's need to take some off the top which will benefit this position greatly.
