SPY 86P Calendar (+8%)

1/8/09 WBT SOLD -1 CALENDAR SPY 100 FEB 09/JAN 09 86 PUT @2.38 ISE, SPY MARK 89.90
The SPY pulled back to 89 level after the run since Christmas. As the indexes rallied, the vol came down dramatically, resulting in price fall if you have calendars on. This happened to everyone. I was down near 50 dollars at one point, but made back the losses and reached a lower price exit (+8%). Trade was on for 21 days. This was a long grinding it out trade. I also should have exited the trade when it went above 90 as I intended. The SPY regained its losses for the day. This is a sign that the market is strong.

12/23 I put on the calendar a few days ago. The SPY came down to 86 and I'm loosing money. SPY has been falling, yet the VIX hasn't been increasing. This is a really good lesson in the critical role volatilty plays in positions. Calendars loose money when vol falls and increase when vol increase. My position is down ($1.75) as of today, eventhough I'm correct directionally. Luckily I have time working in my favor. I"m holding onto this position for now.

12/18 Entered SPY 86P Calendar for 2.2 debit at 49.59 vol with SPY at 89.29.