Baerrus Magnus
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Baerrus Magnus in Options Trader; hang out at http://optionsforum.net,

What Did You Trade On #MeltdownMonday?

Monday, August 24th US Market opened in a utter mayhem. The selloff that started in early August among small cap stocks, then sharply accelerated last week and culminated in a massive, disorderly wipeout on this Monday's open. The chart below shows the situation 14 minutes after the open. Even true stalwart stocks like WMT and AAPL were down over 10% under very heavy selling pressure. VIX was not updating for the first hour of trading. I will not go into the selloff's reasons, enough has been written about China yuan devaluation and other alleged causes. Instead I would like to share what I traded this Monday. And we are not out of the woods yet by any measure.

Since I primarily trade options, I am interested whether anyone traded any options positions during the Monday's session? Generally, I avoid trading the first hour of a session, especially on Mondays. That rule does not apply to closing positions. Sometimes you just have to get out. But I am much more deliberate when opening new positions. Hence, I wait for my target stocks to find its daily range and for the bid/ask spreads to tighten. That usually happens either after about 45min of trading or in some sessions only by the afternoon.

While I was alert to the fact that this session is going to be extraordinary. I did not trade much of anything in the morning. I got to my computer well before the market opened to watch how it would folded. I had my shopping list but the things were moving too fast.

I bought back some short calls I had in LUV. I will be looking to sell the calls again as soon as LUV crossed above $40-$42 band. I covered a short position in AMBA @ $75.98. Just a measure of how fast the price s were moving. A few hours later AMBA was trading at +$90. That was it for me during the opening hour.

source: optionsforum.net