Tuesday, April 10, 2012

Cover short IWM calls, roll failed

I cover my short IWM Apr 85 calls (Russell 2000 ETF), and try to do a roll by selling the May 85 calls. However, by legging out and then entering a new trade, the market slips and I am left hanging. IWM is down another half point or so and even though I adjusted my roll order, it doesn't look good. It is frustrating, but it happens to all traders that try to leg into trades during fast moving markets. Sometimes it works in my favor, sometimes like today--crunch. I may adjust the price down again to try and get a fill later in the day.

The stock market is correcting, but two of the leading stocks AAPL (Apple) and PCLN (Priceline) haven't corrected much. Thus frustrating many of the would-be bears as so many traders try to call the top in these two big stocks. Hulbert cites a low reading on gold sentiment (usually bullish for gold), and that is troubling because I am short GLD delta. I remind myself, that 80% of the demand for physical is from Asia, and that if the stock market corrects, some may have to sell gold to meet their margin calls.

Bonds (TLT) are acting better and have entered a six month period where they tend to do better. LGF (Lions Gate) is nudging up a bit. I plan to roll my short puts if it looks like an assignment is likely. Same for the my short IWM Apr 77 puts, plan to roll to short May 75 puts if an assignment looks likely.

net long IWM
net short GLD

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