Day 1 – 1 Nov 2016
- US election is around the corner with polling day on 8 Nov 2016. Overall market has been quite sensitive with news that are related to both the candidates, mostly to the downside.
- Today RVX was as high as 23, steadily climbing up since 6 days ago.
- Bought 2 butterflies with more room for the downside risk @ $9.75 each. 44 days to expiry.
- Bought 2 IWM calls as hedge for the upside @ $1.30 each. 45 days to expiry
Day 2 – 2 Nov 2016
- Overall market continues to go down. Decided to close one of the IWM LONG CALL to reduce loss from the hedge since I don’t need it for now.
- There will be FOMC statement later at 2pm EST. Since this is a non-directional trade, I can actually keep this trade running and adjust when it moves into the adjustment zone.
- However the BUTTERFLY is already profitable only after one day in trade, coupled with the FOMC statement event, I decided to close this trade and book whateve quick profit the market offered.
- I will re-open the BUTTERFLY after the FOMC event later.
- Winning trade, nett profit $101.52
- It is good to book whatever profit that was on offer, especially when the trade was only opened for 2 days.
- Closing the trade to avoid the swing around major announcement is good for psychology.