Protection absorbed the gain in the core
On Tuesday the market rotated away from technology again. The Nasdaq-100 slipped 0.13% while the equal-weight S&P 500 rose 1.15%. QQQ closed at 717.63 after trading as low as 710.39, about 1.1% below the prior close, early in the session. VIX eased 1.13 points to 17.31 and VXN 0.34 points to 25.22; on the Convexa scale the volatility regime stayed Normal (VIX/VIX3M 0.912).
The account closed the session 0.17% lower, against a 0.34% gain in SPY. The low point of the day came during the morning sell-off. The account recovered through the afternoon as implied volatility declined, and premium decay worked in favour of the core of the strategy throughout the session.
That gain was absorbed by the protective options. The same-day hedges expired worthless as QQQ finished close to its prior close, and the weekly hedges lost value as volatility fell. Net of fees, the two effects nearly offset each other.
The calendar ahead. Wednesday is the heaviest day of the week for the Nasdaq-100: Tesla and Meta Platforms report after the close, alongside IBM, Texas Instruments and Lam Research. The weekly QQQ straddle priced a move of ±1.76% to the Friday 23 October expiry, down from ±2.01% a day earlier. The Fed remained in its blackout period ahead of the 27–28 October meeting.
For information only. Describes the author's own account. Not investment advice or an offer. Past performance is not indicative of future results. The author is not licensed.
Editor’s Note reflects the author’s market perspective at the time of publication and should be read as commentary, not investment advice.
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