Tuesday 19th of October

Good evening,
The no demand bar I talked about yesterday was indeed correct and S&P futures sold off today reaching low at 1155.50. The volume was 3.055m contracts in the ES, which is big and this year we have seen the market go higher within 2 to 3 sessions when the daily volume has been in excess of 3m contracts in volume quite a few times.
Another thing I noted was that the close was well off the lows, by 8 points, on the high volume that indicates that we had buyers stepping in, otherwise it would had no chance close that many points off the low. So watch out for a potential move back up.
See chart image: http://chart.ly/mrkpuy8
Trading wise I lost 12.50 points in the S&P futures, since I had to hedge my short calls, I was stuck a bit too long on the drop and overall I lost 0.62% on the day. However a break below 1150 would be good for the short calls and I would have then chance to sell a bit puts to decrease the negative delta I have on the options portfolio.
On options side the Apple structure I had on did not really work out as the stock didn't move higher following the earnings, but I got out with a tiny gain after paying the commissions.
On the options side I took profit on the short Nov 19th 1200 calls, buying them back for 8.25, making about 7.50 points per contract. Since the S&P can potentially move back up I had to take some profits, so I can sell that strike again if we move towards the 1180 level again. Instead I sold much smaller positions of the Nov 19th 1170 calls for 20.75 and also sold a bit 1170 calls for 22 Oct.
I still have mostly short calls and we have basically short calls from 1170 to 1190 with expirations ranging from 22 Oct to 19 Nov.
I did also sell some 1160 puts for 29 Oct, getting 10.25 for those and also sold some 1130 puts for 19th of Nov receiving 15 to 15.50 for those.
Just had to sell some downside puts in case we are not breaking lower, I cannot have too much negative delta.

Today's Mr Topstep: http://mrtopstep.com/2010/10/19/troubled-waters/

Good night, take care.