Recap of Our SPX Trade

Our post on “Buy to Close one-half of our short strikes at 1405” did not post on thedrummondreport.com site when we made our first adjustment around 1 pm today. This post should have appeared before “Sell to Close an equal number of long strikes at 1410”. Somehow, the upload did not go through, but it did appear on our WordPress.com site (the one you are reading now).

If you did not make the trade, then you are fortunate for not placing it since the SPX closed below our short strike at 1405 by about one point (Now that was too close!), giving you a full 7% profit on our two-day trade!

For those of you who “played it safe” as the SPX inched closer to our short strike late this afternoon (yep … the Captain included!), we suffered a 2.28% loss on this trade.

To my faithful First Mate, Josh, who stood his ground, never wavering against doubt, faithful to the 4 pm “dong” of the market’s close, gallantly fending the fears of utter loss and abandonment by the crew, may I say … inexperience has its luck! You’ve bagged a 7% profit on our trade! (I’ll see what I can do about that extended shore leave you’ve been hinting about.)

All in all, we learned something this week: Markets can be irrational. With the bad European news we received last night, along with the less than expected economic growth numbers, the S&P held its ground above the 1400 mark while briefly touching 1398.

We paper traded an Iron Condor on Wednesday at the 1415 and 1350 levels at a 90 cent credit. In hindsight, we should have gone live with this trade.

If our Bear Call had filled on Wednesday, we would have been ok this week; but figures do not lie, and captains have to stand with the truth, so we will record this week at a 2.2% loss (excluding commissions).

We’ll be looking for another trade next week, perhaps tweaking our strategy a bit.

Have a pleasant weekend everyone!

The Capt.