Theory vs. Practice

So Friday we saw the Dow lose almost 400 points and the S&P lose 43 points. We gave up the gains from thursday and even more because of exactly the reasons highlighted: bad unemployment and oil. Unemployment came in much higher than forecast and oil has it's largest single day increase evAr(that's right with a capital A).

This is EXACTLY the reason we diversify and what was the result on friday? I had an up day that pushed me back over even and would have put me way above had I not let emotions get the best of me. Thursday I was questioning why I wasn't in all calls(just to make a point). This is the reason. ANF reversed as well as MS, my SPY puts at the close seemed like I had a crystal ball. I don't I was simply making a hedge that happened to work very well and had it not worked I would have exited with my small loss.

This was basically the perfect scenario I have looked for. On a large down day my puts go way down and my calls stay flat or increase. My IPI and AKS calls were actually making money, AAPL was hanging in there until close and GRMN was holding support. I checked the market in the morning, knew I was properly diversified and position sized and decided to go back to sleep and let the market do what it was going to. I came back around 11 and checked to find myself back above even by 2%. In this case, excitement got the best of me. I basically took profits on my positions because the S&P was sitting at 1375 and seemed to be holding that old support level so I assumed I made my money on my puts and wanted to finish above even mainly for psychological well being. No harm in taking a profit however, it severly limited them. Had a held till close I would have been up another 10% on my account. There is no way I could know this of course but patience would have paid off big time.

In the end, I can't complain being up 8% when the broad markets were down 3%! That is how it should work. On monday I'll look to balance myself again as I am now left with only call positions. AAPL has their WWDC so I am hoping for good news and bullish action. GRMN held and bounced off support at 50 so I am still in that trade. I entered some ISRG calls at the close since it was holding support at 280. My target is 300 or a break of 280.

IF we get a bounce on monday I'll look to enter more put positions since the rally will not hold unless we see something drastic. I'll look to enter puts regardless but I want to find good enteries.