Well Traders, today started out beautifully with the $NDX dropping to below $1,760. I felt that the top I anticipated due to the STO was about to come true and a rollback was in motion.
Boy, was I wrong!
The markets took a huge, and I mean HUGE swing (up 100 points on the Dow in 20 minutes), and I was left to make a snap decision once the $NDX hit my first roll point of $1,785. I could have done one of several things: 1) take my loss and exit the trade, 2) close my Short and let my Long run, or 3) roll the Upper Leg and try to salvage the trade.
I didn't feel it was necessary to close the trade altogether because there was still plenty of time left, so that ruled out #1. #2 is very tricky. A run-up like this may lead to a sell-off due to profit taking, or fear of a 52 week high so I wasn't ready to try closing my short and letting my Long run. So that left #3. I rolled out from my 1825/1850 position to a 1850/1875 position. I did this using 16 contracts which will basically cut my profit from $3,800 to about $1,600. I certainly am not happy about this and quite frankly, perhaps with such a strong trending market, I'd be better off with Calls than an Iron Condor. I certainly could have made some serious cash over the last few days with $NDX Calls when the index shot 85 points in about 8 trading days!
I know the Iron Condor is better played in a neutral, or less volatile market, which this is not, but the whole purpose of this is to try an achieve a monthly return on my money in order to achieve $1,000,000. To do that, I should play every month, regardless of conditions. Maybe this is a foolish position to be in, but I believe you should be able to be successful every month by playing wide spreads. Perhaps my time frame is wrong? Perhaps I need to be playing on 4 week trades with more contracts and wide spreads instead of 6 week trades? I don't know yet, but I am willing to try soon to find out. Honestly, I thought 125 points was plenty far, especially considering I had some very tough resistance at $1,750. Well, we all know how that turned out.
Anyway, like I mentioned yesterday, there is no resistance for a long time here, so that is a concern of mine. This market is just crazy...housing sucks, economic data isn't great, debts are high, options dating scandals abound, and yet the market just zooms up. I guess it is par for course and I know I am not alone.
I need to regroup here and have a plan of action if this market stays en fuego!
Happy Trading!
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