 Hey everyone welcome to this week's video update today is Friday, February 28th. What a week Just looking at the S&P Obviously trading around 2885 right now down S&P's down over 90 at this point. We've still got about eight minutes left in the cash market But a couple things I wanted to mention one We did a live stream right before the market as the market was opening this morning So if you haven't had a chance to check that out, just go to navigation trading comm slash live dash Streaming and that recording is still up. We've posted in the community as well. Go check that out we talked about just the markets overall kind of our Strategy for going forward and we talked about the the VIX bunker trade and kind of the ramifications of what happened there so I'm gonna It was about a 45 minute video So I don't want to repeat a ton of that so please go back and watch that for more insight on those topics But do you want to touch on just a couple things? one What's the what's the expected move for for next week? So for a seven-day expected move We're looking at about a plus or minus 220 point move in the SPX. So, you know, that brings us. Let's see. We're trading at 28 84 So, you know, that's gonna on the upside bring us to about right there on the downside down to about right in this area so Big big moves obviously and that that's what happens when this implied volatility expands You get these wider wider ranges which allows you when you sell premium to obviously create a wider range as well. So Keep that in mind. I mean you you know in the in a time like this I I want to reiterate you've got to keep your position size Small make sure that you're not over allocating. You've got to be prudent in that like we talk about all the time the other thing I wanted to point out is if we just look at the the year-to-date of SPX so year-to-date we are down 11 and a half percent now That's a that's obviously a sizable move down We talked about this is the quickest 10 percent down move that we've ever seen in the market So, you know, obviously, this is not normal no matter how much short Delta you had You know, it wasn't enough in a situation like this. So Keep that in mind. This is this is a very very Significant move historically So if you know if you're feeling the pain trust me everyone is and and it's just it's it's it is what it is I mean, you've got to you've got to be prepared for this But you can never be prepared for this if that makes sense And so, you know, but what I wanted to point out as far as the year-to-date is okay We're down 11 percent But when it comes to, you know, significant market corrections a correction is Technically considered a 10 percent off the top. Okay, we're we're significantly off that we're up four. We're down 11 So we're down 15 percent off of all-time highs So there's a couple ways to look at that obviously it's happened fast. It's happened hard And so a couple ways to look at that is okay, we're due for a bounce, right? And and so be down 15 percent. Do we get a do we get a bounce into early next week or? Does this does this slide continue now? 15% is a significant move. Don't get me wrong But at the same time and we've seen the market drop from from highs 20 30 40 percent And so you want to keep all of that in perspective as well when you're managing your positions And so obviously nobody knows what's going to happen, but we're going to continue to manage our positions stay methodical Make the necessary adjustments that we need to and and and battle through this now We've we've seen big moves before we've we've lived to trade another day and that is the key You've got to keep your position size small enough You know if you're in a position where you're getting margin calls and you're you know having to take off positions And you're not able to battle back on those because you don't have the liquidity because you don't have the capital Then then that obviously can hurt and so you want to make sure that you are position sizing Don't don't try to don't try to guess where the market's going to go Just continue to stay methodical and and gradually build back to to where you need to be and We want to you know once this thing settles down what you'll find is after a after a market settles down after big sell-off that is one of the best times to Those what we found is those are some of the most profitable times Okay, so I don't want you to get hit on the downside and miss out on the profits You've got to keep your position size small so that you can Withstand so you can weather the storm and then still be able to profit when things do kind of calm down where we still have extreme Extremely high implied volatility, but you're not getting these you know moves that you know hundred hundred fifty point ranges Every single day in the market. You know if we look if we if we go down into a smaller time frame looking at a This is just a two-day five minute. So each one of these bars represents five minutes I mean look at the ranges on these you know in in just these in these time frames I mean this is one five minute bar and we're talking about from 29 40 to 2910 I mean that's a 30 point move in the S&P in just five minute period So you know this this wolf calm down, you know I know you know when the market's grinding higher forever, and we're just we're wishing for that implied volatility You know it seems like that's never gonna end It seems like it's gonna go up forever and then on the flip side like this when it's going down It's only been a week a little over a week But it feels like forever right and so you've you've just got a you've got to play You've got to continue to play the probabilities and you've got to continue to remember that nothing goes in one direction forever But you've got to stay small enough to allow those probabilities to play out and to benefit from that So let's go through the alerts We had quite a few alerts obviously this week with everything going on with adjustments and Taking off trades and adding new trades. So let's go ahead and jump right in to to recap these so First trade closing trade in Amazon. We closed out our an iron duck price Obviously move lower exceeded our exit profit. So we we bailed on that one Same thing on Google. We had an iron duck there price move lower exceeding our exit point. We bailed on that one Closing adjusting trade in GC. So we closed out the put vertical side of an iron condor in gold Price had breached our upper break even there's very little value left in that put vertical So we closed that and then still holding our call vertical side now. We're still holding that so let's take a look at gold and What's and interestingly before I before I go to that actual trade? I mean look at gold another thing. I wanted to mention is it's down over three and a half percent today Now a lot of people think that gold is good is kind of that flight to quality and it moves inversely to stocks and we did see that In this stretch here, but now even with the s&p down 60 points gold is down over three and a half percent And so gold is actually a very uncorrelated asset. It's not it's not significantly Inverse correlated to stocks and and that's what we're seeing today where You know the stocks are down as well as gold is down big and so what did that do to our trade? Well, it brought us right back into range And so we're actually profitable on this iron condor overall remember we closed out the put vertical for next to nothing Now prices come all the way back and we're gonna be able to close this one out I'm gonna leave it over the weekend. Obviously if we get a huge spike higher. I'm gonna wish we had closed it But you know if we get a little bit more down movement, we'll go ahead and close this out and book a nice profit overall The other thing that we did just kind of jump in ahead to the another gold alert that we did today Is we added another centered iron condor? We're talking about one contract at the selling at the 20 Delta a $450 max profit on On just one contract here So you can see prices moved down even since we put this on hanging out right here So we're just in waiting mode in gold and again, I only did one one contract You know other times I may have done a couple but you know with everything that's going on with a velocity of moves going on We're just gonna stay real small just doing one contract here But still getting a really nice credit of 450 on that gold trade Next trade rolling adjusting trade in Apple. So some of these short Delta positions You'll see a theme here where we're rolling down these strikes in this case We're out in March We rolled out to April and then rolled our strikes down Closer to price and when we roll these whether it's a short call vertical or a long put vertical What we're doing is we are we're typically when we when we roll these we set it up so that our strikes are giving us about a 60% probability of profit now you can see Prices moved down significantly We're over 50% of max profit on this piece and we're at a probability of over 74% So in and typically what we talk about is okay once we get to about 50% of max profit Then we then we would roll again, but the way things are just moving in huge droves We're giving this a little bit more leeway in other words We don't we don't want to roll down and then we get this whipsaw action where that where the stock spikes back up So we're just letting this sit over the weekend, you know if we do if we do get a move back up We will be looking to add some more short Delta Not necessarily an apple but in indifferent will probably stick more to the broad market indices that we already have positions on DIA Yes, we may add to Apple. We'll see where we're at with everything But just holding this over the weekend to see where we where we shake out early next week So that's our position in Apple Next one opening trade in SPX. So we opened up an iron duck this one with 14 days to expiration And I'll go to SPX because we had we had several trades here. I'll go to the platform here in a second Next trade opening adjusting trade in SPY. So we opened up an iron condor in SPY and With that with the down move that we've seen since we opened that we are outside of range And I talked about this a little bit in the the morning video, but You know, we're outside the range and we've we've got if we look at the just the call side We've got just a little bit of premium left in that so, you know You certainly could have taken that off today closed out that untested side But again, we're just gonna we're just gonna hold this over the weekend Obviously if it moves lower, we'll take that off and look for a potential bounce but for now We're just we're just leaving this on and obviously if we get a bounce we'll be back into range Or if we continue lower, we'll take off that untested side and then hopefully look for a potential bounce Later early next week, so we'll see what happens there Next trade closing trade in SPX. So we had an iron duck on with SPX with the down move We hit our exit point. We closed out of that one Closing trade in Roku same thing. We had an iron duck in Roku This one actually did bounce after the fact. Let's take a look at a chart of Roku It's acting a little bit different than the rest of the market, you know Not as not as much of a slide, but we're still at our exit point. So we needed to exit What we will look at potentially if we do get some bounce next week is there's stocks like Shopify and Roku that are That still will set up for reverse iron ducks And so I don't want to put one on down here and then it and then get ripped Ripped off to the to the upside and have to exit that but if we do get a bounce higher You know, we might potentially look for some reverse ducks with which gives us that no risk to the downside On those trades too. So we'll be we'll be mixing it up and in continuing to add positions like that as well Next trade closing adjusting trade in GC. So we closed out our short call vertical from our previous iron condor Excuse me. This one just had one days to expiration So we needed to exit and then I already showed you what we're what we're still holding in gold that other short call vertical As well as that iron condor Next trade rolling adjusting trade in SPY So we had a short call vertical on from a previous iron condor We rolled that from March out to April and we rolled those strikes down just like we talked about We were well over 50% of max more like 80% at that point and so we went ahead and rolled that And then on a later alert, I'll show you we we actually ended up just closing that out because we as the market continued lower We got a significant drop booked more profit on that piece And so we went ahead and just got out of that to to lighten up our Delta's a little bit And I'll talk about that here in a minute Next trade rolling adjusting trade in DIA. So With this one, we were already in the cycle with 52 days to expiration So we didn't want to roll out to a further dated longer than 52 days And so what we did is we just rolled our strikes down and stayed in that 52 day cycle I got a question about this in the in the community because you know, typically when we're rolling like in this case in spy we rolled from March to April and When you do that toss displays it as a vertical roll because that's what we're doing in in the case when you're staying in the Same cycle toss is gonna display it as it's condor not iron condor But it's condor because because of the way the the legs are bought and sold. That's that's what that's what is considered So that's what toss displays it And so just want to make sure you understood that and so we rolled that down from the 297 302 down to 281 286 and so let's just go ahead and take a look at DIA And Take a look here. So here's the remaining short call vertical that we have on here again We're over 50% of max on this one But again just kind of giving it a little bit more time see what happens early next week and and then we will either again We're in April at this point on Friday now. We've got 49 days to expiration So we're not gonna roll out to May with 77 We'll stay in April and we'll just simply roll these strikes closer collect that credit and continue to keep that short Delta And again, if we get a spike higher in stocks, then we will look to potentially add our other You know short call vertical back in here I will also be looking to sell some additional premium whether that's iron condors or strangles but again, we're gonna stay super small and And and keep those keep those positions small and manageable and look at this I mean we've we've got two minutes left in the bell and we're you know, we're down What was it 60 some when we started and now we're down only 36, so I mean these are just massive moves we're seeing here Next trade Opening adjusting trade so we added a short strangle in bonds bonds have obviously been in fire on fire to the upside We added this with 59 days to expiration still holding our other adjusted strangle with 31 days And so let's take a look at that So we've got these two pieces on in bond So here's the one we just added price is still within range, but we're down because implied volatility has just expanded significantly In in in bonds the other piece that we have it's well out of range here That's the 161 straddle. You can see what we're way out here if we take a look at the untested side we've got very little value left in those puts and so just again wanted to give it over the weekend obviously if we get a Bounce lower that's going to be helpful for that position But either way most likely we'll be rolling our puts down and go inverted in that in that bond Straddle so that one's got 28 so You know, this is kind of a little bit of a gray area as far as what we like to do But you know with on Monday will be down to about 25 days to expiration So to me that's that's close enough getting down to that 21 day area that will probably when we roll those puts up We will also roll that out into May So both of our positions will then be in May, which at this time have that 56 days until expiration Next trade opening adjusting trade in ES. So this is where we earlier We added a long put vertical in ES. So we're adding to our short Delta and we did that on 225 so let's just go to the chart for some reference here So on 225, which is this day here So in the what would happen is we that was that that was much so Monday We had the big down day on Tuesday. There's the closing bell on Tuesday in the morning We got a little bit of a bounce higher, okay And I've mentioned in the community if we open higher if we bounce higher I'd be looking to add some short Delta So up in this area here, which is just happened to be great timing We added another long put vertical For that and we got we got the benefit of that flushed down on that piece And so that was that one that we added there Next trade rolling adjusting trade in XLK another short Delta position rolled this from March out to April I just did our strikes down. So if we take a look at XLK We're now in a position where we could potentially roll this one again Although XLK along with the Nasdaq is actually green on the day Let's look at the futures Yeah, Nasdaq is actually green at Nasdaq is actually up an S&P's up. Look at that move But we were down 36 now we're up seven Whoo crazy moves So XLK So you can see we're sitting right here and again if we continue to get a bounce higher We might this may be one that we potentially add to if we continue lower We'll roll these strikes down and stay in April Next trade opening trade in rut So we up opened up a new iron duck in rut this one moved down far enough today We ended up closing that one out it hit our exit point. So we went ahead and bailed on that I talked about this in the morning video too. We will continue to add iron ducks In SPX and rut in these big indices. I was looking to potentially do Another one today, but decided to hold off and wait until early next week on that So we will so we don't have any trades on in rut at this point Next trade rolling adjusting trade in DIA So this is that another short call vertical that we rolled from March out to April. So already showed that Closing trade in SPX. So we bailed on another one of our SPX ducks that hit our exit point Rolling adjusting trade in QQQ again This is as it displays here a condor because we stayed in that same cycle with 51 days just rolled down our strikes And let's take a look at the cues. I don't think I've touched on them yet So we've just got this one in April and again kind of sitting right here same story We get a bounce. Well, we might add to this if it continues lower We'll roll done roll down those strikes and stay in April Opening trade in Ford slash 6e. So we were looking for another kind of diversified underlying to add some premium to 6e fit that bill Fit that bill. So if we look at at 6e, you can see prices moved up higher in 6e since we put this on implied volatility It has expanded and so we will we're gonna be very careful about adding to these positions Now, this is a pretty small as far as futures going. We've got a max profit of 462 And so, you know, this one may be one that we potentially add to if it if it bolts out of our range But more than likely we'll just roll up the untested side and continue to manage these trades to keep our position size small Next trade rolling adjusting trade in IWM another short delta position So we just rolled this one stayed in that same cycle with 51 days just rolled our strikes down So if we take a look at IWM a lot of these look very similar prices hanging out right here So we got some profit on that piece and we will potentially either add to or roll this position Next week depending on which way things go Next trade closing adjusting trade in ES so we had two two of those long put verticals in ES We were over fit 80% of max profit on that piece So we went ahead and just close that out to lighten up our as I mentioned We lightened up our short delta a little bit and we'll reload if we get a bounce higher Closing trade in SPX. So this was another iron duck in XP SPX that we bailed on Opening trade. So we opened up another iron duck in SPX and we've still got this one on And if we take a look here So price is hanging out right here just inside the duck head. So we're in good shape at this point Of course things can change very quickly obviously Let me get back to that Yeah, so price is hanging out right here right inside that duck head. So we got all the way down to 2803 which is down here. So we would hit new lows if we get to that break even on SPX Next trade closing adjusting trade in spy already mentioned this so we had that short call vertical We went ahead and close that out and we're still holding that full iron condor Opening adjusting trade in SMH. So again, just kind of jumping in adding a little bit more short premium I already showed you that one. We've got that short strangle in SMH. We've got those actually I don't think I did touch on that one. So SMH. We've got two pieces on here We've got our adjusted short strangle and you can see prices hanging out right here And then our other strangle that we have not adjusted is this one here We can see prices dead centered, but we are down a little bit just because all about implied volatility expansion And when things when when options expand like that, even if you're dead centered You can you can still be down a little bit on the trade So we're just going to continue to wait now if if we get an implied volatility contraction next week You're going to see premium sucked out of these like like probably like you haven't seen before You know implied volatility is going to still be high relative overall But on some of these positions if you add Add some short premium And your timing and your kind of direction happens to to work out I mean you're going to see these the premium get sucked out of these options real real quick Or if they come up with a cure for the corona virus or you know something something crazy happens where they Where it kind of lessens the overall uncertainty in the markets Then you're going to see you're going to see some premium get get sucked out of these things Closing adjusting trade in DIA already mentioned that so we closed one set of those still have the remaining one just again Like I said lightening up on our short delta there Rolling adjusting trade in ES. So this is that ES long put vertical that we went ahead and rolled this from 35 days out to 49 And then rolled those strikes down to to accommodate price moving lower Rolling adjusting trade in SMH. So that was the adjusted strangle. I just showed you so we were down to 21 days So and it was and we had very little value left in the left in the call side So we went ahead and rolled that not only our calls down, but we rolled that from 21 days out to 49 And then we opened up a short call vertical in VXX So this is what we talk about in the in the VIX course of when you get these spikes putting on some short call Verticals in VXX. So that's what we did here now. This did add a little bit of long Delta But you can see it's it's come in nicely from where we put it on And so just looking at the chart of VXX, you know, we put it on when price was up here And it did contract here with the market going higher. I mean look at this S&P's up 25 to end the day And so that's that's we got the benefit of that here with this little bit of a down move in VXX So overall speaking of short Delta just want to give you a kind of an idea where we're at overall, you know we we lightened up some of our short Delta and And so now where we sit is we actually have a little bit of long Delta overall in our portfolio not too much But we do have a little bit of long Delta So a bounce would definitely be helpful in this case and then if we could you know in a perfect world Let's go that yes In a perfect world, you know, we get a we get more of a bounce in the next week We reload add some more short Delta and then you know, then we would get that continuation to the downside now nothing ever works out perfect and we're not trying to catch bottoms and tops or anything like that but You know when we when we lighten up our short some of those short Delta trades I think you know the market was about right here and obviously we wish we had to held it longer But then it it has reversed and so you know, we'll look to potentially add some more short Delta as we as we move along here Next trade closing trade in rut. So that's that iron duck. I mentioned Rolling adjusting trade in CL. So we've got our short strangle in CL still with 48 days to expiration So we did not roll out in time. We just rolled down our calls. So we had the We had the 58 and a half calls and we rolled those down to 47 and a half Our puts are at 47 and a half as well. So now we've got a short straddle in CL So if you take a look at the way that that looks Obviously, it looks a little goofy because it doesn't take any consideration the credit that we got on those calls But we are inside the range here and I just waiting for some more time to pass And then we'll eventually when we get down to about 21 days to expiration in this May cycle Then we will roll that out to the next cycle, which will have 40 to 50 some days in it And so that's where we're at in oil Lastly opening adjusting trade in GC So that's where I showed you we added that iron condor in Gold out here with 50 50 some days to expiration. So still just kind of hanging out pretty centered there So those are all of the alerts. Let's see if I missed any positions here that we didn't touch Wheat we've got this iron condor grains have not really moved that much So price is still hanging out right here inside of our range Apple I mentioned that one. We've got that short call excuse me long put vertical DE we've got a Short call vertical here You remember after earnings this one spiked up out of our range has come all the way back down into range here So just continue to manage that mentioned DIA IWM QS SMH SPX SPY VIX I'll come back to that VXX X BI so this is one that this one is in March has 21 days and it's out of range Given it a little bit more time just to you know in case we do get a little of a bounce We did you know closed up 1.84 percent today But if we look at the the value in those calls, you know, we still have full value in those calls So I wasn't I wasn't excited to adjust that one already. However, we are down to 21 days to expiration So certainly could have done that today. We're just going to give it over the weekend See if we can get a little bit more back towards the center And then we will roll this entire spread out to April which at that point will have about 46 days on Monday And then I mentioned XLK so VIX again, I don't want to Beat a dead horse on this one. We talked about this a lot in this morning in the morning's Update, but if you look at this, I mean, you know, well first thing I do want to just touch on it briefly just because it is such a frustrating thing, you know If you look at okay, the VIX is the VIX spot index is trading at call it 40 39.9, right? Oops 39.9 But look at the look at the VIX futures because the VIX options are tied to the VIX futures Even the short-term ones with five days left are trading at less than that They're only trading at 35 and then if you go out to June, which is what we have They're only trading at 20, you know, so Basically market saying, you know, okay, there's fear. There's uncertainty in the short term But out in June we got got basically no fear And so obviously with our June options, they did not expand the way that we way that we wanted them to if you go back to the Go back to VIX on the trade tab and talked about this this morning I mean we you know these five that we sold we sold for 281 and they're trading at 550 But the ones we bought at a buck 15 or only trading for 225 And so that's why we're we're seeing not only not even a profit on these things But we're actually down on them a little bit. I am going to hold on to this primarily because I want to see What when we get an implied volatility contraction if we do, you know If if we get down to 60 days to expiration, we're just gonna bail on this But I do want to hold this for a little bit longer just to just to watch it in kind of real-time and update you all We're we're not doing any more of these. That's I mean, that's pretty obvious. We've talked about that as well These you know using the VIX from this protection standpoint is is is not does not work in a situation like this I mentioned it has worked in the past we had these on for that February 2018 situation It did work, but this go around for whatever reason the way that they're pricing, especially these longer term VIX options It's not it's not doing what we want it to do So we will be we will be coming out with A different kind of alternative to that bunker And we've already been putting some of these on even with the market already down as much as it is And it's it's working like it should and it's essentially the A similar trade using a back ratio on the put side in SPY or an index like that and it is working So we'll have more details about that coming out and And and so stay tuned for that but this this current bunker strategy using the VIX is dead We're not we're not we're not going to be using this anymore So Having said all of that um I want to see if there's anything else. I want to mention bonds. So I talked about our bond position, but Bonds obviously have an inverse relation to interest rates and and as a kind of a flight to quality with stocks If people are nervous about stocks they pile into Whoops, they pile into bonds and and we're seeing that escalation here if we look at You know one thing you can look at it's not Direct inverse correlation, but it's you know zb's closer to the 30. It's called the 30 year um But the if you look at t and x for example, that's the ticker that shows the 10 year treasury And so like I said interest rates have an inverse correlation So I mean look at what interest rates have done and just today just a huge drop in interest rates And so you're going to be hearing a lot about that in the media as far as What that means and if you look at this it says 11.27 is the price But you think of that as really as 1.127 Is the interest rate on the 10 year and so we're going to be looking at some yield curve inversions if you've heard that term But don't quite understand what that means essentially the most common one that that's looked at is the the difference between the 2 and the 10 You know, so basically, you know the two year if the two year is paying higher than 1.127 Then then that's considered an inverted yield curve because typically if you're taking the duration of a 10 year note You should be getting more yield than you would on a two year But in this case the two year is paying a higher yield than the 10 year and and I haven't looked at the two year I'm not sure if that's the case yet, but You know most likely we will be seeing this and then we could potentially see the fed come out and try to lower interest rates Because what they essentially really the only thing that they control is those really short term one month two month three month type interest rate durations And so if they come out and start lowering those You know then then you get that Yielding inversion and and that has been a predecessor to a lot of recessions now The media is going to jump all over that and any time there's a yield curve inversion You know, they're they're going to start spouting that the recession is coming Keep in mind all these you know some of these terms that especially the media uses You know recession correction, you know, what does that all mean? Well Essentially a correction is kind of considered a 10% decline, right? We are in a correction We have seen the correction a recession is considered a 20% drop And so, you know, you you want to you want to look at those from really what they are Those are things in hindsight, right? We're after we've been down 10% that's when we've made a correction After we've been down 20% that means we have That means we have been in the recession So keep that in mind when you're when you're reading headlines and you're hearing the media talk about oh, we're in a recession though You know things are still pretty good. Now that doesn't mean they're going to continue, right? I mean this if these a lot of these companies continue to be shut down from the coronavirus and and profits and revenues and that kind of spirals into other industries and other places, you know that Certainly could but but the economy overall is is still very strong. An employment is very low, you know with interest rates being low There's a lot of cheap money for businesses to borrow and expand and do different things So don't get too caught up in the headlines that you read When you're trading the way that we do You still have to be more focused on probabilities and strategy Over news and headlines. Okay, so keep that in mind everybody have an excellent weekend and Make sure your position size are small enough so you can sleep this weekend Don't be in a position where you're nervous and waiting You know and just waiting for the market to open because you are nervous about what's going on But have a great weekend. We'll talk to you next week