(1) /ES just prior to the regular hour’s open. Price is failing to find support at the rising 8-hour SMA lower band. It should find support there if buyer’s are strong. Support also in the 4347-55 area where yesterday’s HB and last week’s low are located. Dropping below 4347 would be bearish and would next target yesterday’s 4294 low.
I’m resting an order to buy Oct1 /ES 4350/4250 Put Verticals at $21. See on the chart below the location where those should fill. My stop is the 4395.75 high. If the hourly bands rollover the declining upper band will become strong resistance.
Filled.
/ES finding support for a small bounce so far. Again, below 4347 is very bearish. I’m using 4347-55 as a bull/bear area for today’s trading.
And now a bounce from exactly last month’s 4347.75 low however bulls are not looking strong so far today as the rallies from support are small. 🤔
So I’ve got to do some other things today and I’ll be away from my trading desk. Before I leave I wanted to reduce risk in this /ES position since price is currently trading around the bull/bear area. I’m still leaning bearish but if price clears the bull/bear area to the upside my currently profitable open position could easily turn into a loss. To Delta Hedge (DH) the position I sold a 15-lot of Credit spreads to reduce my cost in the position from $10,500 down to $4,125.
8:30 PM update: /ES chopped around for much of the day but is dropping again overnight.
Below is the Unbalanced Broken Wing Butterfly. The open profit continues to increase but currently I have $4,125 of initial cost still in the trade. I could put a trailing stop on the position so that if /ES starts to rally overnight I’ll protect some or most of my profit. Of course, if the rally is short lived and price turns down again I’ll be mad that I got stopped out. 🤬 There must be a way to help reduce my upside exposure without getting out of the trade. 🤔 Oh yeah, there is! See the DH adjustment that is available to me right now.
Is the DH a better way to manage a trade than trailing a stop? If you have an opinion on the matter, leave a comment below. Oh, and one more thing. I could really move my ‘stop’ (DH) down if I wanted to reduce my cost even more. This is also available right now!
