Today we exited our Citigroup call butterfly that was entered yesterday. While that was a very quick exit, our priority is to keep losses small and controlled. Yesterday’s price action did not look quite right, and today we are seeing downside follow-through.
In addition, the Financial Select Sector SPDR Fund (XLF) is forming a bearish engulfing pattern over the top of yesterday’s bullish engulfing candle. We suspect the market may be starting to roll over.
We have also added some bearish put spreads in broad market ETFs.
The details are as follows:
Sell to close: C July 17th (monthly) 130.00 strike call (ratio of 1)
Buy to close: C July 17th (monthly) 140.00 strike call (ratio of 2)
Sell to close: C July 17th (monthly) 150.00 strike call (ratio of 1)
Credit: 1.21
Loss of -0.34 or -$34.00 per spread.
Entered into put butterfly spreads in SPY and QQQ as follows:
Buy to open: SPY Sep 18th (monthly) 710.00 strike put (ratio of 1)
Sell to open: SPY Sep 18th (monthly) 680.00 strike put (ratio of 2)
Buy to open: SPY Sep 18th (monthly) 650.00 strike put (ratio of 1)
Debit: 2.01
Max risk = 2.01 or $201.00 per spread
Max reward = 27.99 or $2,799.00 per spread
Entered into put butterfly spreads in SPY and QQQ as follows:
Buy to open: QQQ Sep 18th (monthly) 670.00 strike put (ratio of 1)
Sell to open: QQQ Sep 18th (monthly) 640.00 strike put (ratio of 2)
Buy to open: QQQ Sep 18th (monthly) 610.00 strike put (ratio of 1)
Debit: 2.29
Max risk = 2.29 or $229.00 per spread
Max reward = 27.71 or $2,771.00 per spread