That was ugly…
I laugh now as I read my last post. At this point that seems like a year ago.
Sept was very ugly. After such possibilities, I ended the month down 8%. I had to defend and close nearly every Put position. That’s ok. It’s best to face the brutal facts. This volatility is crazy. I have no business selling options in this environment. Probabilities mean nothing during times of insanity.
To take advantage of this volatility I’ve switched to buying straddles. We see the market down 777 one day, up nearly 500 the next. Now, on a daily basis I am opening straddles. A straddle is a purchase of a call and a put at the same strike price. I trade these right at the money. I open a new position just before the close of the day, hoping for a gap open with follow-thru the next day. This was profitable each day for the last week. I close the straddle (usually for a profit) just before the close of the day. I then open another straddle, again, right at the money. That way, I make a profit if the market moves up or down the next day. I just want it to move radically. This is pretty much the opposite of the credit spread strategy.
When this period of massive volatility ends I’ll get back to trading credit spreads.
