Wednesday, January 14, 2009

Trading RM update 01/14/2009

At first glance today seemed like it should have been a great trading day.

The S&P was down 30
The VIX was up 5.9.

Being short term traders (and short term traders of options) these seem the makings of a great day.  Upon further review, much of the movement in the Vix/SPX/individual stock was over night.  There was opportunity today to catch big moves, but it was select.  If one was trading options you may have seen a decrease in volatility, depending on what time of day you entered the position.  The SPX had a slow/sideways/choppy move from open to close. 

Our Oscillator continues to confirm that we should be name specific, booking winners when we have them, and be extra selective on names traded and capital allocated.  It has some what flat lined after a brief up tick from holiday levels.  (For an explanation of the Trading RM Oscillator visit previous posts). 

The chart of the Vix today is interesting.  A big portion of the gains were made overnight and in the first hour.  If you were net long options you may have seen sideways action and volatility leaving your name.   As intra day traders we can not get frustrated over what moved overnight.  The Vix declined from 9am cst until the close.  (Times on chart are est).