Monday, November 9, 2009

Bookkeeping: Selling Another 1/4th of Original SPY Call Position from Friday

This morning we took off half of our SPY ETF Call position around S&P 500 level 1080.  I am now selling another quarter at level 1090.  Again this is a 1 day rental of our cash, so the risk reward of this trade was magnificent.

I will sell the last 1/4th of the position on a move to S&P 1100 or a move back to S&P 1085 (moving up my mental stop loss from 1060 - Friday, to 1070 - this morning, to 1085 - now).  The gains on this morning's sales were 30%ish, the gains on this batch will be near 70%.

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On any move over S&P 1100 we'll do a similar type of trade, but we'll assume there is some resistance as we move to that level. Once more this whole position was only 5% of our portfolio so we made a sharp risk/reward wager with a limited amount of capital.  Our acceptable losses were limited on the original trade to just a few S&P points downward; while not expecting this type of move so quickly up, we never complain.  Would I have enjoyed holding the whole position until this afternoon?  Sure - but I'm already thinking about the next trade.  I am risk averse so I'm in, I'm out and I'll let others be greedy.  I return to sleeping on my cash mattress while posting some significant risk adjusted returns and making "investors" happy.

We still hold all of our long index ETF and our normal equity positions ... of which we'll begin to take profits on any move into S&P 1100. 

Long SPY Calls in fund; no personal position

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