Wednesday 1st of September

S&P futures (ES) opened up more than 11 points higher today from yesteday's close and basically had a vertical day closing up 33.75 points or 3.22% on the day. Huge run after the release of the ISM data coming in at 56.3 vs. 53.2 expected and manufacturing prices much higher than expected at 61.5 vs. 55.5. The S&P basically moved 8 points on that release, which is very large move for ISM to be. The move higher in S&P started overnight when Australian GDP and Chinese PMI came in stronger that expected. On tthe other end the US ADP report was 25k weaker than the market consencus, which indicates we will see a weak Nonfarm Payrolls number Friday. I guess the market is already pricing in a weak number and possibly QE also, maybe a major factor for the rally over the last 24 hours?
After the  ES bounced off 1040 yesterday, 3rd day over the last week basically, I was looking for a move higher and left my short puts unhedged. However the 1050 straddle I had on was not doing well when the ES gapped up on the ISM release. I had not expected that strong of a move on the ISM and was forced to make several adjustements following the release. Going into the data I had 1050 straddle along with short 1065 puts, as my logic was that is 1065 resistance was taken out it would most likely move higher and leave my short puts some distance off the price and I also expected vols to come down on a move higher. That did exactely happen, however I took about a 12 points loss on those 1065 short calls on the gap, as I decided to close them down. I also closed the 1050 short call, which was part of the straddle. I took profit on the 1020 puts for September as they had gone down to 5 points in price and I don't want to try and squeeze the last points out of them. The reason that I took them off is in case ES would drop big I don't want more short exposure that is giving me only 5 more points, just not worth the risk at the moment. I also sold 1040 puts expiration September. The move higher has now turned around the exposure picture a bit for me. Yesterday I had cleary most USD worth of postions to the downside in form of short puts. Today I have most value to the upside in terms of calls. I have now from 1070 and up to 1100 short calls at every 10 points interval, for expiration September and October. Also added some short term puts just to balance the delta a bit, sold 1080 and 1070 for 3rd of September. I still have the RIG back spread on for October, which has really moved nicely in my favor last 2 sessions. I made above 10 points in the future today, trading long only. Eventhough I was able to pocket some good gains today, the valuation of the calls rose more than what I brought inn, so account value dropped on the day. But in my view we are now at a more stable level and I see less risk of a sharp down turn in this area, so I feel more comfortable sitting around here and focus my trading to the upside. I have plenty of points to play with on the outstanding calls, so it looks rather well for the remainder of the new month.  Last but not least that performance of August turned out to be +7.89%, best month so far on the program, very nice. Have a great evening, speak tomorrow.