Theta Burn

My portfolio was on fire today! Unfortunately not the way I like it –  instead I received a major dose of theta burn as today’s whipsaw made my OTM Feb SPY puts look like a Eucalyptus tree in Kinglake, Australia. Those buggers lost 80% of yesterday’s gain, despite a rather feeble bounce in equities. However, Mr. VIX dropped by a few points (this thing is broken lately) and that combined with some creative bid/ask pricing by the MMs did the trick. I’m still holding, if you must know – but in retrospect I probably should have covered yesterday night. What is it they always say about hindsight?

Seems like I’ll have to make a decision by Friday afternoon as I completely forgot that Monday is a trading holiday (President’s Day). So, the tape in the next two days will be key. If we push much higher from here I might have to cut and run and try my luck once more after the long weekend. Three days of inactivity will suck the life out of OTM Feb puts and unless the market continues on its trajectory downward tomorrow there is little gain in holding them. Did I mention I hate holidays? Seriously….

In a nutshell however – nothing really has changed. We expected a little bounce and today was actually quite mild – things could have gotten a lot uglier for the bears and maybe that’s what we’ll face tomorrow. The fib chart I posted yesterday is still valid, so stick with that. You might have noticed that the 23.6% fib was the line in the sand today – the bulls tried to breach it but failed. If we push up tomorrow – 842.5 is your friend. We also closed below 8000 on the DJI for the 2nd time in a row – last time that happened was in November. I actually thought about it and decided that it’s not that big of a deal unless we put some distance between us and that damn line. Seriously, it’s just a number but obviously it means a lot to the mouth breathers. I personally am more interested in large numbers in my profit column.

Anyway, I won’t post a full update today as it’s Wednesday and I frankly need a day off. I also feel a bit discouraged by that Zero vote but promise to return tomorrow once I’m done pouting – you damn leeches! 😉

Cheers!

Mole