by billb
1. June 2009 13:05
My calendar spreads (discussed here) have received very little drawdown up to this point. It seemed like I damn near picked a top at SPX 920 (lucky), until today. The SPX never hit my original profit target of 850 and expiration is coming up in the next couple of weeks. Reviewing the technicals, a reasonable profit target appears to be right around SPX 875. Now that time has passed, this should offer me a reasonable reward and it's a reasonable pull back point. What if it doesn't pull back? Then I lose. But I had my risk clearly defined and well established going in, so it's not a huge deal. I also have a lot more eggs in the bull basket than the bear, so I'm happy to see up moves. I'm in this to make money, not be right. 
On the upside, VWO is really moving. It is up 18% from my cost and is the strongest performer in the portfolio. My only regret is that I didn't get filled on a 19.99 GTC order late last year. I'll settle for up 18% though.
And in trading system news, I believe I'm about 1 month away from testing another trading system. I haven't figured out if I want to use options or just plain stock yet. It's a quick "in and out" type trading system with a maximum hold time of about 10 sessions. It may be tough to overcome the option spreads in so little time. This is what testing is for though. I may test with both vehicles and see which one makes the most sense. I'll share results here.
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Tags:
ETFs | Options