XME cred spread goes bad

[Fritz]

On 1/8 I sold the F52/50P for XME @ .32¢.
The choice was based on a ToS scan of my ETF list, >80% Prob of Profit, and >10% profit min.

I also use technicals on the charts.
On the 8th, the trend was still up, the MACD was positive.
The stochRSI was up and could be thought to be overbought.
There was good support at 50 and some small support at 53.
It was an avg vol day for XME.
The long term Fib of 2 years was crossed at 50% ~ $56 for 4 days or so.
The short term Fib of 1 year was touched at 100% that day.
Price was above 9, 20, and 50d MA.

On the 19th, the triple cross happened downward on Price, MACD and stochRSI.
Although I rolled within Feb, the 50 for a 46, and took some profit (or prevented a greater loss), I'm still under.
The support at $50 seems to be holding, thus far, after a pierce on Fri.
The 9d has crossed the 20d on the 25th and is headed for the 50d.
Ugly

Course, there is still time, but .....


Did I miss something on the 8th or is it just one of those things or time for a pull back (which actually I had charted in the SPY for 1/13 and DIA for 1/25)?

[Fritz]

Well I've certainly broken smart rules here.
Any opinions?
wait it out for a reversal
roll out idea
make an IC of it

[Mojo]

Sorry, I've been offline for several days and just saw this.

Anytime I'm in a position where my stop loss (by dollar, %, time, price, or technicals) was hit I'm going to exit as my first choice.

I find that once I'm in a trade that goes against me I get too emotional to handle the adjustments correctly if I'm oversized, overleveraged, or I'm stressed.

In hindsight:

- What was your original plan to exit and managed?
- Why did you put on the trade? (eg. Because you thought the trend was bullish?)
- Was the reason you put on the trade still valid when it came time to adjust?
- What was your max loss and profit goal?

Thanks,

Mojo

PS - Sorry I didn't answer your original question. No, I don't think you missed anything on the 8th. And adjusting to the lower strike in Feb was a reasonable move as long as your opinion was still holding.

[Fritz]

Normally I sell spreads that are 10% OTM with 80% Prob of Profit based on ToS software. XME was that when I got in on 1/8 though it drifted slightly by days end.

In hindsight, I think I should have exited when the 9d crossed under the 20d. At that point (1/25) I'd have been out $1.05 per.
Or when the MACD crossed down on 1/19 when I would have been out .01¢ per plus comms.

As it turns out, I got out a few minutes ago (because I think the overall swing by Exp this week will be neg) with a total loss of $32 inc comms. I consider myself lucky and happy.
At one point I was down $4 per.

I was in originally because I was quite bullish based on the techs I use(I'm one of those who thinks the fundamentals are already in the price), price/vol, Fibs, MACD and StochRSI with ToS software.

In the recent past, I've not set good management on cred spreads like I did with long positions. I need to come up with a better plan than no plan ;-).

When I adjusted I was still bullish and felt XME was just temporarily following the market down. I figured it would bounce up mightily and I'd be extra happy. So much for that idea.
In general I'm taking small positions at this point (4 contracts usually) whilst I get my cred spread bearings. $500 loss is OK at this point.
In the last 8 or so months I've put on 30 or so. 1 broke even and one I legged out of and profited. All the others expired with full profits, until this month.

I still have a LLY F35/33P spread that is slightly against me. I've yet to figure a way out of this.

I also have OIH F120/115P that has been against me in the last week or so, but is currently, barely safe.

A couple others are tight and a couple others are "sure" things.

I also got out of a couple early in the month when their spreads were to .05¢ or less and/or I'd realized 80% of the profit.
I'm not a total bonehead ;-)

[MatthewHaley]

Fritz,

I know everyone is being polite, but I think you missed some important signals on the 8th. The ticker has a history over the past year of rather substantial pullbacks after big runs up. It does NOT consolidate unless the run was minor. On the 8th you had a new 12 month high. The MACD was at a high as well. The run had been extended in both time and price change.

Since it is a commodities play , you were impacted by dollar, and when the Euro started to be under substantial pressure, you have to watch that as CME will follow the inverse of the dollar.

Also, the TOS probabilities are based on equal moves in each direction from any point in time. If you are watching the technicals, did you think it was as likely to go to 66 as 52 from the 12 month high? If you answer no, then you can't say that the TOS probabilities are accurate. You already know they are not. Probabilities assume that there is no direction to a market, or a ticker.

I know this is the less than polite response, and I would echo some of Mojo's writing. When you have a broken exit point, you need to exit. Also, if you are willing to wait for a cycle if the trade initially turns against you, then buy enough time for that to happen. That has been between 14 and 37 trading days in the past year for XME. You can assume you need a few more days than the longest one for safety, and if you want out 5 days before expiration, add them as well. Then you round to the NEXT expiration date.

I bet I haven't written anything you didn't already know, but it is common to try to rush the trend. I know as a trend trader that rushing a trend usually leads to smoking hopium. I don't like the taste of either hopium or crow, so I go longer on the time line than many traders.

Matt

[Fritz]

Hey Matt. Don't need polite ;-)

I think you're right:
"On the 8th you had a new 12 month high. The MACD was at a high as well. The run had been extended in both time and price change."

I dunno what I was thinking as far as XME moving further up "with the trend".
My own tech charting indicated a pullback on the SPY and DIA in early Jan.
I should have listened to me.! Not that they necessarily correlate, but I try not to be in the deep end when the cannonball drops.

I didn't have a good exit strategy for this and a couple others I had this month.
I got lucky and fixed XME.

LLY may work out, I rolled to next month.
SDS I think is a straight on loser (and them leveraged ETFs I must stay away from).
OIH may hold up.
WFMI is gonna be a loss of some kind, even with the roll up I did yesterday.
That was a bad choice coz I was in front of earnings with a stock that reacted oddly at every earnings period the last year.

I may know some of what you said, but reiteration is welcome.

I appreciate your input.