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Why RUT is rising aggressively?

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4 replies, 4 voices Last updated by Wayne Klump 5 years, 4 months ago
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    • #2866

      Wayne Klump
      Participant
      @wacky.wayner@gmail.com
      Points: 860
      Going to The Trading Triangle LIVE 201630 Day Affirmation ChallengeUltimate Income Trader Workshop
      Rank: Freshman

      To expand on my recent post. John will definitely correct me or explain it better if the theory is correct as these are his systems, but… The bearish butterfly thrives off of large market moves in the beginning of the trade. But if you move quickly under the market in a environment that is knowingly creating 20 point swings in a day then you are going to do yourself a disservice. The trade gets whipsawed and you lose in either direction. by being slow on your rolls or adds then you allow the crazy market to fall back into your position then flatten your trade or exit.   If the market continues to skyrocket away from you then you were definitely better off not adding. I personally am in April still due to late entry and very slow add after 1040 was breached. finally rolling today and holding max loss at 1110 this will still allow the market to fall and easily hit profit target. The late adds allow you to buy the butterflies cheaper and instantly give you a bigger hump behind the market. Sometimes a position out of the money that has profit in it if the market moves make faster and more money then always trying to keep high theta at the money/ spot price. As a disclaimer I trade M21 which changes the game for me. but before I traded individualized plans for different months I have always made nice profits with slow add BB trades. In general I liked to let the market sit for 2 to 3 days before adding and definitely always bought into up day and up 5 minute bar. I hope I explained things better. I draw things better rather than typing them.

    • #2846

      Kas Eccles
      Participant
      @kasadian@yahoo.ca
      Points: 269
      30 Day Affirmation Challenge
      Rank: Freshman

      Wayne, could you please elaborate a little on your text above?  I feel like I  “might”  know what you’re trying to say, but I’m not entirely sure that I do.  Would you mind expanding a little?

    • #2838

      Wayne Klump
      Participant
      @wacky.wayner@gmail.com
      Points: 860
      Going to The Trading Triangle LIVE 201630 Day Affirmation ChallengeUltimate Income Trader Workshop
      Rank: Freshman

      Just a different perspective to the idea of trying to stay inside the tent. Sometimes when we look at an expiration graph it deceives us. Sometimes the best way to make profits is to be gaining the most theta were the market isn’t not necessarily were it is. In a volatile market if you are always staying under the spot too much or even at all you will miss the profit on the moves that benefit a high vol trade. This is the point that john makes on being slow to roll up. Yes you might have better theta and be better off if the market settles for a period of time but what is most likely going to happen, A move in either direction and being under the spot is not were you want to be. Actually you would prefer to be far away from it.

    • #2781

      Evie Petrikkou
      Participant
      @evie@myimagesoflife.com
      Points: 715
      30 Day Affirmation Challenge
      Rank: Freshman

      I know my response comes after we have had a small retracement. It is very difficult to know when a pullback or consolidation is coming. Remember, we can run out of money before the market can become rational. I stood back and looked at the market action on Monday and realised that had I not been in a trade I would be asking myself: ” What are you waiting for?”. What has already happened is done, we can’t change that. We may not be able to make a profit for April, but we could substantially reduce the losses on a pullback, which is akin to making a profit from today on.

      One thing I have tried to do along this campaign, is to stay just inside the tent. Sometimes, adding a few contracts higher up and closing a few lower down, in an effort to at least be theta positive closer to expiration as we near it. There is plenty of time left for April for things to change.

    • #2719

      Alexis Jimenez
      Participant
      @av.hedgeinvestment@gmail.com
      Points: 246
      Rank: Newbie

      I am trading the Bearish Butterfly since 2014 and I had more than 90% winning trades, however I have a trade that I started on February 19th using April expiration and starting the shorts at 990. I always do this trade by the guidelines because I really believe in then but since last week I was thinking and doing research to see why the RUT is still rising when there is a lot of fundamentals and technical analysis that indicate the RUT its supposed to at least retrace. Please see my points
      On the technical side, if you use oscillators you will noticed the RSI its hitting 69.70 and Stochastic are in very overbought conditions with 98.05, also there is a 98% correlation between SPX and RUT and the SPX has 2 consecutive day hitting the 200 EMA and 2,000 psychological value
      On the fundamentals last week came up with a few important reports like unemployment and PMI showing us the US market has expanding, but this will motivate the FED to do another increase in the interest rate that at the end will weight negatively on the equities market.
      I think the last few days movement has realize by the supply and demand on the Russell itself rather than the sectors weight. What I am trying to say is the 3 principals sectors are (https://www.ishares.com/us/products/239710/ishares-russell-2000-etf)
      Financials 26.18%
      Technology 17.96%
      Consumer Discretionary 14.14%
      and today’s movement on those sectors was
      Financials 0.0%
      Technology -.05%
      Consumer Discretionary -.06%
      so I assume RUT’s movement will have to retrace soon. Please don’t be confuse no one can predict the market but we can estimate next movements. Any though?

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