Can't Nobody Hold Me Down

Once again the market gapped down in my favor and then rallied back up to my chagrin and loss of paper profits. I am trying to be patient and let my positions work but this has happened two days in a row. The market is acting bullish and normally I would welcome it but I guess I find it annoying due to my net short position. I also find it annoying because we got some less than good news from some of the major financials today. WFC had great results on the surface however their write downs were fairly large and they predicted hard times in the next couple quarters. MS had nearly triple the loss expected and the stock gapped down but finished even on the day. This happened essentially across the board. There were some positives with US Bank beating estimates and fairly limited write downs which helped the stock rally. This is a time that is separating good banks from bad and it definitely still appears like US Bank is one to have in the portfolio long term.

I was looking like a genius at the open, SKF was up, SPY was down and the Q's were flat to up, everything in my favor. Financials reversed as did the S&P, the Q's continued up so the hedge was fairly useful but didn't make up for the overall change. It was very odd, at the end of the day the SKF finished flat yet my options lost .20, as did the SPY but the options gained .20.

The quiet rockstars were actually my short strangle positions in AAPL and AMZN. Despite gapping up $5 my AAPL position made money from the volatility contraction just as I predicted. Same with AMZN, they don't report until tomorrow after the close but volatility already started to contract putting more money in my pocket. I do have to say that one could likely make a decent monthly income with option selling strategies, but it will never match the risk reward potential of a long option. I will defintely use selling strategies to enhance my gains when appropriate in times like this.

The complete surprise today was my corn futures position. At the end of regular trading I had a loss, then I saw someone tweet about corn and took a look and I suddenly had a nice gain as something caused it to shoot up 3%. I obviously hope this continues and will be curious to see why it moved like that. I was obviously looking for movement to the upside but that was a swift move. Since I am holding a December contract I am debating if I should take a time trade and just hold it until December and see what happens. I could actively trade it and commissions are not too bad but I am curious what my profit will be come December if any.

ADM confirmed it's inverse head and shoulders pattern today so I may look to get long on a re-test of 29 just to make sure it isn't a fake out but the pattern looks very nice. Overall, with the broad market I can't argue that things are acting bullish and the more we test the 955 level it will eventually break so I will be quick to cut my short positions if that happens. We have another slew of earnings on deck for tomorrow so we'll see what happens futures are up decently at the moment. I feel ok about my overall positions but am feeling a bit more exposed since I highly doubt my strangles will help me out as much in the future as they did today. I may need to add a select long position. Overall I just want a pull back to 930 to exit and get long biased again but as I have been taught many times in this game it has nothing to do with what I want.

Total Return for 2009: 163%