RUT: Huh?

The VIX chart told the whole story today and "on que" mounted the biggest intraday rally i've yet to see in my short 2 year trading career. As I'm typing this post the ER (RUT) futures are at 731. At 10:00 this morning (Pacific) they hit a low of 673.20. That's a 61.8 point move in just over 8 hours. Keep in mind that 100 points is a significant MONTHLY range to trade in.

On Monday I bought back all of my September positions EXCEPT some Sept 770/780 Call spreads because I thought it would literally take Jesus coming back down to earth for the RUT to trade back at 770 by Friday. I like to think that I am extremely disciplined on taking of my positions before expiry week, but if you sell spreads like I do there are sometimes one or two positions on the top side that are so far away that it does seem "impossible" for them to get hit on expiry. I'm writing this post as another gentle reminder (to you and myself) that it is always best to just take everything off by expiry. I learned my lesson months ago when a similar situation happened on Thursday at 12:00 when one of my top positions was 40 points away from the price action. I figured with an hour to go I was safe. The market rallied 20 points the last hour of the session and then gapped up 20 points piercing my strike erasing my profits and handing me a $500 loss instead.

With the high volatility there is EXTREMELY EMOTIONAL buying and selling going on, much that flies in the face of any technical set ups your looking at. Take advantage of this movement, but don't be fooled by these one day wonder moves and they are likely just that.

VIX Daily Chart: