Last night, the FOMC was to make their meeting announcements. There was some hawkish rumours that the Fed would raise rates earlier than expected or cut the bond purchases faster than the market expected USD10billion/month. This made me err on the side of caution. However, my portfolio hedging since early 2012 has generally not turned out well since the market has been on such a strong uptrend.
Thus, I bought 5 SPY Put Jul’18 14 191 @ $1.50 and 5 SPY Put Jul’18 14 192 @ $1.20, for a total outlay of $1350.
The FOMC meeting announcement was late at night my time, say 2 am. Surprisingly, I was woken up by an extremely loud and heavy thunderstorm. I then saw a Bloomberg alert on my iPad that mentioned that the Fed was continuing with its $10billion taper. It took me a few moments for me to realize what had happened, and I then fired up my laptop to close the position. As a result, I sold 5 SPY Put Jul’18 14 191 @ $1.13 and 5 SPY Put Jul’18 14 192 @ $1.34. This was probably the first time that I used market orders on IB. Thus, I lost a total of $115 on this trade, exclusing commissions, which is much less than what would have happened if I hadn’t been woken up!