The market opened on the high this week and closed on its low. A very one directional move and very bearish. These types of moves have very little follow through to the downside during the next week, with most of them followed by a positive move the next week (see 3-year chart with highlighted down week and arrow pointing to the next weeks candle).
Also, follow through downside moves after a 3% pullback in the SPX is extremely rare. A down week of any magnitude during a options expiration week is also a very rare event.
To follow up with the trades put on this week, the 2030/2020 put spread closed about $7 in the money! Painful. However, I was able to sell an equal amount of 2030/2040 call spreads for 90 cents to cover a bit of that loss, and I sold a larger quantity of 2015/2005 put spreads expiring next Thursday (normal expiration cycle) for $3.25.
Any up day next week should be accompanied by a crush in volatility which would give me a good chance to collect some gains from those spreads.
