New Trade SPY Butterfly

I set a new spread today in the SPY. I typically don’t trade the SPY spreads, but I have a new method to trading butterflies that I am live/practice trading on the small contracts. I have done some extensive research on this simpler and more capital effective approach. I do have a lot of different approaches and styles when it comes to my repertoire for butterfly trading, but I am always looking to improve and grow. Now my main butterfly that I trade is still and always will be traded, but I’m looking for the solution to a slow grind higher with volatilities staying cheap for an extended period of time.

The idea that I have is to reduce the capital exposure, but also maximizing profit potential. This style of butterfly is mostly managed by the greeks with Delta being the most important. For this approach I don’t really care where the market is going, just as long as its not a fast up or especially down market.

Below is my first live trade with this approach. And as always I will keep the updates coming.

SPYBUTTER

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SPX Butterfly Adjustment

I just adjusted my SPX butterfly. There is a lot of strength in the market, and in an earlier post I talked about my target being around 1520. With the market making new highs today, and with the possibility of short stops above the market I decided to reduce my deltas and my risk. Below is a new picture of my current risk profile.

I have no futures trades on now, I would like to add once my system confirms a break out trend. If you would like to watch my entries and exits and stop you can follow then through the tweeter feed on the right side of the blog.

2013-01-29-Analyze

My view as always been slightly skewed when talking about my bullish or bearish outlook on the equity markets. But sometimes I have to give in to what the market really wants todo. And right now the market really wants to go higher, with that said my target on the SPX is 1520.

1520 to me seems like a reasonable area of resistance, with money flow continuing to drive the equity markets higher. At or around that level I wouldn’t be surprised to see profit taking with large hedge funds or other large money managers unwinding and reducing their positions. This could send the equity markets in to a small shallow correction. How deep this pullback could be is anyones guess.

SPX

Looking at the Corn Futures its the opposite of the equity markets. I see some tight consolidation in a wedge formation. I think this spot would make for a low risk short with a stop right above the high in this consolidation around 735.75. You could potentially have a target at the lower end of the wedge range.

CORN

I’m Back!

I hope everyone is doing well and the start of 2013 has been successful. I’m back and have been busy managing my other business, but now that I have taken care of my other responsibilities I will be back at the blog and updating my trades.

Over the last few months I have still been very active with my monthly option trades and had another record year. I have also been very active with trading futures with some very promising success.

So my plan with going forward is to continue posting my option trades and adjustments, but I will also be posting my futures trades with entry and stop. I hope you all find this information very interesting and useful in your own trading.

I do have a few trades on currently. As most of you know my bread and butter trade is the SPX butterfly, which I have had to adjust a few times. Below is the risk profile of my current position. And I do have one future trade on currently as well, the EUR/USD future /M6E. I opened that position @ 1.3377 and have a stop at 1.3297.

2013-01-27-Analyze

New Trade on Whole Foods Market

Whole Foods Market is a beautiful looking chart, they continue to impress me, especially since the average person probably can’t afford to shop there. I think we could see WFM near 105 within the next few months or sooner. There isn’t really anything technically wrong and nothing really stands out about this chart in terms of trend reversal. I like it.

I want to get in on the action  and the best way for me to participate is to buy a broken wing butterfly. For me broken wing butterflies have build in insurance just incase you are wrong in your directional bias. They can also be used to lock in gains and have a free butterfly on. As long as there is liquidity at multiple strikes broken wing butterflies are a great way to trade directionally.

Trade Ideas

SPX is basically doing what I thought. The 1470 level was a major area for my Fibonacci retracement. We tagged that area and pulled back slightly. The interesting thing is this sideways action, this could be signaling a couple things. The first would be a bull flag, but we will have to wait to get a confirmation. Confirmation would be a new high followed by a continuation of the trend. Or this sideways action is a distribution stage signaling a possible correction in the near future. Either way I am still not adding as many trades as I usually do.

The market does seem very resilient and with yesterdays pullback being bought up almost confirms to me we might not see any type of correction until 2013. It makes me a bit more bullish over the next few months, but my feeling is to see how October goes.  If October goes well I will have to assume the holiday rally is underway. In anticipation of a rally I am going to set some trades that will have plenty of downside room, but are neural to bullish trades.

One new trade that I will share with you is on GLD. I know the recent bullishness on gold and I have to say it was not easy taking this trade, but if you remember a month or so back (CLICK HERE) I started getting bullish on gold and I have been trading it from the long side. A few days ago I put a new trade on GLD.

 

My weekly SPX butterfly will be going on today. I have had great success trading this strategy over the last two months. This is my idea of  what I will put on today, but the actual strikes might be different.

Another trade idea I have for a neutral to bullish market is an IWM broken wing butterfly. I really like broken wing butterflies for one simple reason, they are very easy to adjust and manage.