The markets opened strong and kept trading up almost all day; some profit taking ensued around 2:30 ET, but the major indexes all closed with solid gains. Trading volume remains average to low; it was up 1% on the NYSE and 6% on NASDAQ; trading volume for the S&P 500 remains at its 50 day moving average. The Producer Price Index dropped 0.6%; that together with further analysis of the FOMC announcement appeared to encourage traders. Lower PPI encourages the inflation hawks and the FOMC language generally put a positive spin on the economic recovery. RUT closed up a little over $4 at $684 while the SPX closed at $1166, up almost $7. Both the SPX and RUT have been tracking along the upper edge of their Bollinger Bands since late February. Whenever I see this price behavior, I keep thinking it has to pull back, but you can incur a lot of damage by trading that belief. Tomorrow brings the CPI and jobless claims reports, but it seems unlikely those reports will derail this train.

I closed the last call positions for my Mar condor today; I will allow the 620/630 puts to expire worthless. After buying 3 hedge positions of long options and rolling spreads up and down nine times, this position ended up with a loss of $2,850 or 19% on twenty contracts. I was too aggressive in removing one of the call hedges at one point and that cost me dearly. The lesson here is that taking a small loss on the long hedge options is much preferable to a larger loss on the spread positions. But, in any case, it is a manageable loss. I was forced to roll the 700/710 calls of my April condor up to 720/730. This strengthened the position somewhat to a positive theta of $125 and a delta of -$87. March and April are turning out to be very tough months for delta neutral traders.