GoSeigen wrote:GoSeigen wrote:Further technical breakdown in the S&P500 today. Target looks like 3500 area. VIX is subdued. Little sign of panic. VIX term structure inverted. Have added more straddles.
GS
Well two weeks have passed and not much has really changed! If investors were going to panic they haven't done so yet except in specific markets like Russia. Effects of sanctions are being digested and banks have been hit hard. I've bought back some bank shares where I'd previously taken profit and continued nibbling at Russian shares.
VIX has risen steadily which flatters my long options positions; given the trade seems to have been correct I have continued adding Sep S&P straddles as fast as I can afford. An uncomfortably large position is now becoming reckless. I'm uneasy because it all feels too simple, but this is a trade I'm taking with my head not my heart so hopefully the logic isn't too far wrong.
GS
Quick update:
1. I was wrong about the Ukraine war being over in a few weeks. The Ukrainian defence has been inspiring.
2. I was also wrong about the S&P dropping to the 3200-3500 area, at least it hasn't done so immediately. Ironically that makes me less bullish than I was and so I'll be taking profit on long positions as prices rise.
3. Given the normalisation in options markets I have reverted to writing S&P options over the past two weeks. This consists of a combination of progressively closing the OTM Sep put and call contracts I already hold and writing new short strangles in Apr and May contracts. Obviously I'm hoping the market will sit in the 4200-4800 range for a period of time. If not, I am protected by the ITM Sep options I already hold. My notional option exposure currently is around 10-20% of net worth.
GS