The market swooned during the last hour of trading Friday, and volatility soared. This caused the stop loss to trigger on one of our open weekly positions.
Most of the day Friday was relatively quiet in the market, until the last hour when all the major indices began a sharp decline into the close. This affected both of our open positions; a summary follows:
1) SPX Weekly Put Credit Spread.
SPX closed at 1630.74, down 23 points or 1.52%. The volatility index, VIX, closed at 16.30, rising 1.77 points or 12.18%. While our short strike (1615) was still 15 points away, both the price movement and volatility increase contributed to our stop loss being triggered to exit the position for a $95 loss, as per the trade guidelines. We will enter a new position early next week for the next weekly cycle.
2) RUT Weekly Put Credit Spread.
RUT closed at 984.14, down almost 11 points or 1%. The volatility index, RVX, closed at 21.16, an increase of 2 points or 10.4%. Below is the current position as of the close Friday:
RUT June 1 Put Credit Spread
This position is currently -$57.54, or 5.7% of the maximum allocated capital of $1,000. Our target for this position remains at $67.50, the stop loss trigger is set to exit the position if the max loss of $90 is reached.
I will post an update early next week.
As always, stay keen on your risk management and trade carefully.