HiPOS Weekly Update: Despite Market Wobbles Going According to Plan

Market Pullback After Entry but So far, an Unrealized Profit

Our HiPOS Conservative strategy is designed to potentially profit whether markets move up, down, or stay sideways.

While a drastic move against our position, especially early in the trade, may put positions under some pressure, the pullback has not resulted in negative effects. This is due to volatility falling since the short put spread trade was established and some time passing by.

The underlying market meandering lower is usually fine for the strategy which benefits from time decay.

Reading Our Graph Above

Including Monday’s Martin Luther King Holiday, 9 trading days remain until expiration on January 28th.

We can see how the purple defensive posture curve is sloping nicely down and to the right. Price can oscillate lower than it could earlier in the trade because of positive time decay and probabilities adjusting the closer we get to expiration day. The market currently sits about 13.5% above the short 4030 strike price.

If price moves beyond that curve our traders may decide to take additional risk limiting measures to protect your clients.

What Are You Rooting For?

Aside from your favorite football team this weekend as the NFL playoffs starts?

More of the same and time to tick by. Ideally, the market moves higher so that your clients in strategies with long market exposure like ZBIG and Buy and Hedge can also see increases as well. But alas, a move lower is also fine so long as markets don’t decide to do something that is outside our normal probabilities.

While none of us wants to get older, if you are a HIPOS investor you do want time to move faster!

Legging Into Iron Condor Not Looking Probable for This Go Around

Given the small amount of time remaining, the window is closing on that possibility quickly.

Some of you have gotten used to the idea of putting on both sides of the short volatility trade. Typically its easier if we first have the call side to leg into the put side. Or if we see markets move back towards highs quickly. Plus have higher sustained volatility.

So far, the numbers just haven’t qualified for us to find a call side trade that qualifies.

With that, just wanted to wish everyone a great holiday weekend!