XLF bounced between \$12 and \$12.50 this week. We broke above \$12.50 to \$12.70 or so at the open but failed to hold it. The decline in volatility (because of the trading range) and the approaching expiration deteriorated the options premium. I just checked my options strangle position after hours just now and realize it's barely below my \$0.50 mental stop at \$0.495. Accordingly I will look for an exit early next week.
On the other hand, the trading range is tightening along with the market. So a breakout move is imminent. This calls for some more patience.
I will watch the market early next week and see if my premium stays below \$0.50. If it does, then I'll follow my plan and sell the options.
[caption id="attachment_1502" align="aligncenter" width="500" caption="Financial SPDR ETF"][/caption]
[caption id="attachment_1503" align="aligncenter" width="500" caption="Financial SPDR ETF"][/caption]
: http://traderpau.files.wordpress.com/2009/06/2009-06-05-xlf.png : http://traderpau.files.wordpress.com/2009/06/2009-06-05-xlf_prop.png