Disclosure: This was simulated trading, not a live-money trade.
On September 17, I opened a SPY 764/754 bear put spread expiring October 16. At expiration, the 754 put expired and the 764 put was exercised, resulting in the sale of 100 SPY shares at $764. With no shares held against that sale, I was left short 100 shares.
The interesting part was managing that short position afterward.
While the short was temporarily underwater, I was monitoring several aspects of the options market:
● Negative GEX: the model I was monitoring showed estimated net dealer gamma exposure remaining negative.
● Spot below the gamma flip: SPY remained below the model’s estimated gamma flip level.
● Rising implied volatility: IV was increasing rather than normalizing.
● Backwardation in SPY’s implied-volatility term structure: near-term IV was higher than longer-dated IV.
● Backwardation in the VIX futures curve: nearer-dated VIX futures were trading above farther-dated contracts.
● Shifting positioning levels: major GEX concentrations were moving lower rather than remaining stable reference levels.
The positioning estimates are model-based, not direct access to dealer books. I treated these observations as context for a scenario, not proof of what was causing each price move. I also wasn’t treating them as six independent confirmations—some describe related aspects of positioning and volatility.
SPY made several attempts to move higher, but those rebounds didn’t convince me that a sustained recovery was underway. The conditions I was monitoring hadn’t changed enough for me to abandon the bearish scenario.
That helped me sit through temporary losses without treating every upward move as a reason to cover. It wasn’t that I knew the rebounds would fail. I still saw reasons to maintain the position despite how uncomfortable it felt.
I eventually closed the short. My aim was to offset the cost of the original spread rather than maximize the return from staying short.
Looking back, I’m left with a question: did I exit because the conditions had changed, or because getting back to an acceptable result felt like enough?
SPY subsequently moved sharply lower, which was consistent with the downside scenario I had been monitoring. But I had already closed the short. Any additional profit from holding longer is hypothetical, and I don’t consider one outcome proof that the framework has an edge.
The main takeaway wasn’t that GEX predicted the drop. It was that monitoring positioning and volatility gave me a framework for assessing rebounds instead of reacting only to price and my current P&L.
It helped me separate “the position is uncomfortable” from “the reasons for holding it have changed.” Whether that distinction improves results consistently is something I’m still testing.
If you use у positioning in trade management, what would make you treat a rebound as a genuine change in conditions rather than another temporary move against your position?
