Condor Options

Trading intraday reversals is a lot easier than catching a football on your helmet. Even so: this morning, we sent a note to our subscribers:

…based on VIX mean reversion and ISEE put buying signals, we’re looking for a possible small bounce. The open this morning should be fairly negative, but later today or perhaps tomorrow we may see a small reversal. This would be a broad-based technical bounce – so the same trading considerations as normal apply: pick an index, pick an instrument (ETFs, futures, options), i.e. this is a quick trade, not an investment! Not taking any real size here either, just a small play.

Of course, it came a bit sooner than we expected, but before 10:30 the Dow was up 70 points and just about any gap-fading play did nicely. Sure enough, VIX did revert a bit today, closing down 1.24 or 4.2%. These little trades are always fun.

More importantly, notice the continued outperformance of RUT/IWM today, up 1.5%. DJX/DIA closed up about 0.3%, while SPX/SPY was up around 0.6%. Why do we care? Well, we’ve already entered our first March position, and IWM’s continued stability can only be good news for us. The index itself is about where it was when we entered our position, but with the volatility down today (RVX fell 0.82 or 2.4%), our trade is already showing some profit.