Earlier today I closed the XOM Nov. $85 Calls and after that some XLF November $20 calls at a loss, but didn't have time to get the P/L out so let me clean that up and update XLF a bit.
I closed these because they expire this week, they had good momentum from today and they're at the point in which the time decay really is becoming a factor, XLF can actually be at a higher price tomorrow and these calls could be worth less so I figured I might as well take the loss here, but if it were a profit, I'd likely have done the same exact thing, it's all about forward looking and where I suspect I've gone as far as I'm going to go with the position.
The RT data for some reason doesn't show the original; fill took some research their was an original and an add-to for an average of $.385, at the fill above of $.34 the loss on this position was -11.69%.
As for why now, Financials had pretty good momentum today and I prefer to unload options in to momentum, there were also some 3C signs that were in line with the broad market, I figured even if we had a short pullback of a day and a half, between the drawdown and the time left, we'd need an explosive move just to get back to this area (contract value).
This 1 min intraday chart doesn't give me a lot of confidence in the near term which is what really matters with options expiring this week, this is why I said I felt differently about a long FAS position, it can suffer draw down, but the theta isn't a problem like these options face.
There's something I like about Financials, you have to remember, even though I do expect a pullback in to regular hours and not just what we saw on the open of futures last night, I expect it to be constructive, meaning to help the market make a move higher. I'm under no illusions about that move higher, I think it's tradable from the long side, but I'm not bullish.
The 2 min chart was leading negative intraday as well, it seems the 1 min chart migrated over to the 2 min as both are leading negative today, the overall price pattern in this area is already in negative position if you look at the higher 3C reading to the left.
This 5 min chart though is the reason I wouldn't go short Financials and the reason I wouldn't mind holding FAS (3x long Financials ETF) right now, I think after a small pullback, the broad market and financials specifically have some upside.
The 5 min chart shows the F_O_M_C knee jerk reaction I always warn about and a positive divergence, but it's stable for a decent base, it needs another leg of support and that's why a pullback could be helpful, right now I believe it would be helpful based on the charts.
On this 30 min chart I show a positive divergence now, but also what I think a pullback might look like in price and 3C, I think the former F_O_M_C highs could be an easy target.
Long term though, I'd want to be selling short in to anything above that F_O_M_C high as long as 3C is showing distribution in to the move higher, this 1-day chart has significant distribution . As far as the price pattern I drew in, that's only a rough guess of a slanting H&S top, it could make a higher move and still be a bearish Broadening top, this is the end game, the trending trades that I don't think will need leverage.
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