New Strangle and Butterfly

What a crazy day, to be honest I was not fully expecting that. The good news is almost all of my positions survived today, but most of my trading today was defensive trading. I managed 2 trades at a small loss, which I think is good considering the amount of risk I had on. I did how ever add two trades one on EWZ and my normal monthly SPX butterfly, the risk graphs are below.

We are in for either more upside or this is the blow off top people have wanted. If we are truly going to get more upside, I think we still need a healthily market, i.e a bull flag to confirm the breakout today is the real thing. We could be destined for higher prices based off the simple fact that it seemed like people were buying like mad today. Now could this have been a short squeeze?  YES, but I’d like to see a bull flag confirm the breakout. And with that I’m looking for some sideways action for two or three days with a breakout on the fourth or so day with a new high. That will tell me that we are due to reach 1500. If that is the case I will focus more on the long side of the market with put broken wing butterflies or any short vega trade. Now if this was the blow off top, I think we will see IV rise aggressively, with price consolidation back near 1430. If we do get consolidation near 1430 I will be looking to add units, diagonals and call broken wing butterflies.

Only time can tell what will happen, and as of now I am on more cash with less positions, waiting with anticipation of what will can make on true market direction over the next few months.

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