I'm out the short side of my GE strangle. I purchased these puts at 0.872. I loss about \$41 for this trade alone. Doesn't look too bad, but remember, I still have my calls to get rid of, and those are the real losers. I'm down \$172 for the calls at this moment.
The reason for ditching my GE puts now is simply because it is refusing to go down. In fact, it is outperforming the market for the last few days even as we're retracing in the market, see Figure 1.If a ship is refusing to sink in a storm, it is surely a sign of strength. GE has filled a gap with low volume, Figure 2. It could very well shoot back up from here.
Furthermore, this is a long weekend and there's probably going to be little action all week. The time decay is going to really hurt me as we approach expiration soon. It has been dropping steadily already. Time is definitely not on my side for this trade. So I've decided to ditch it on signs of strength of GE.
At this point, I would like to clear this off of my desk and look for a re-entry.
[caption id="attachment_1208" align="aligncenter" width="500" caption="GE vs. S&P 500"][/caption]
[caption id="attachment_1204" align="aligncenter" width="500" caption="General Electric"][/caption]