As Close To Paper Trading As You Can Get

Much of my trading is trying to figure out what paper is doing (the big institutional traders). Today I want to share with you the power of Twitter in helping me do that.

Last Tuesday, I was looking for 1186 as an S&P target. I felt funny about calling for that because it was so far away from the market. I didn't feel funny about it Wednesday morning when the S&P bounced off that level then kept going higher. And higher. And higher.

I had bought some puts there, SPY 115s, as a spec trade to test the waters. The market was looking pretty strong, and I was already searching for higher levels. But I took the trade, made a few cents on it, then took my morning break.

Not good. The S&P took off higher and I was left with OTM puts that I didn't want anymore. So much for speculation.

I found another zone of interest at 1196-2000. Luckily, it held the market and I bought more puts, 118s this time.

My confidence was a little low, but here's where Twitter came in. I follow a person who works on the floor of the CBOE, @Misiu357. Want to know what paper is doing in the option pits? Follow her.

Days like Wednesday are when it really pays off. Her tweets are about as close to paper as I'm gonna get. Just as I was starting to doubt my strategy, I noticed these on my stream:

@Misiu357 $SPX Sep 1160/1180 put spread- paper pays $6.60 on 20K live vs. 1185.75 $$

@Misiu357 $SPX Sep Weekly (9-9-11) 1075/1115/1140 put fly- paper pays $0.75 on 8K/16K/8K live (buying wings) vs. 1192.75 $$

PAPER. Buying huge amounts of puts right where my original target was, and buying higher too.

These tweets gave me the added confidence that some big players were looking at was I was looking at. That's all it took. I got bigger. More 118 puts and some SDS too.

So another big thanks to you @Misiu357!

After the 4pm EST close, futures re-opened down. I watched them for most of the night as they got worse. Yesterday (Thursday) was a great day for me. I took some profits around 10am EST, tweeted the gap at 1204.42, added a little more specs around 1200, held my breath as 1204.4 was hit, and then let some go at the 1190 level. The loss on the 115s from Wednesday was well mitigated.

Today I'm looking for 1180 and 1173.97. 1165 looks good too. Above 1204.4 likely targets 1230.

As always, I'm looking for paper. And getting by with a little help from my friends.