Trading continued listlessly today in very low trading volume and was unexciting with the exception of the last few minutes. Sellers rushed into the market in the last 15 minutes of trading today, driving the major indexes down. However, buyers pulled the SPX back up to the unchanged mark at $1258. But RUT didn't outperform the SPX today as it has all year. RUT closed down $6 at $784. The benchmark S&P 500 index gained 13% in 2010 and NASDAQ gained 17%, but RUT gained 25% this year, an impressive gain for a broad based market index. One of the key stocks powering the NASDAQ run was Apple Computer, gaining 53% in 2010.

There was no significant economic news today, but next week has a full economic report schedule, culminating in the jobs report next Friday. Traders' reaction to that report may set the tone for next year's trading. The bears can make a strong case for a coming correction, citing basic economic issues both here and in Europe. In addition, many technical indicators suggest an overbought market. But one of the cardinal rules in this business is, "Don't fight the Fed", and the Fed is continuing to fuel this market via their quantitative easing program. Accordingly, I closed my GS iron condor today for a 17% gain. The financials have led this December rally and if the bull market is to continue in January, that GS call spread could be in trouble. Better to lock in a nice gain rather than risk a loss. This position was recommended in one of my Trading Group meetings; those recommendations gained 45% in 2010. You can examine the trading record in detail by downloading the file in our Free Downloads section of the web site.

My Jan iron condor on SPX continues to work off the red ink from repositioning a couple of weeks ago. The position delta = -$81 and theta = +$172, so the large positive theta will continue to work in our favor, but the call spreads are just one standard deviation OTM while the put spreads are two standard deviations OTM. With 20 days left to expiration, we are still exposed to a continued bullish run on SPX. The Feb RUT 680/690 860/870 condor stands at -$500, delta = -$24 and theta = +$89. In the short time I have been in this trade, the IV of the options in these spreads has increased about 3 points. Thus, the position remains underwater even though the spreads are well OTM. This is an excellent illustration of the negative vega of the iron condor spread.

My new book, No Hype Options Trading, is now available on Amazon. I will not be carrying it on my Online Store because I can't compete with Amazon's pricing (no wonder Borders is going out of business!), so order a copy on Amazon.

Thanks to all of you who have supported me this year. You have my best wishes for a joyful, healthy and prosperous new year. Happy New Year!