Trade 22 a Review

Looking Ugly

Well, something of a surprise? Not really vol  http://INDEXEURO:VFTSE  was so low when this trade was placed we got 31 for the 7250 put and 19 for the 7450/7500 call spread. At close of play on Friday that put was worth 55, and the spread about 12. So on our premium of 50 taken in we are currently losing about 17, 0r 33%. Time to panic? Go on………..

Looking Towards Expiry

We still have until 21st April for this trade to come right/go horribly wrong/panic and close out for a loss. Remember we are safe all the way down to 7200, and we are safe up to ∞ (infinity and beyond). It is a wake up though- as vol hit its all time low, it was a time to buy premium not sell it. So the reverse of this trade would have served us well. THAT is a lesson in volatility!

It’s a Horrible Trade

I jokingly said I was talking myself into this trade last week-and out of boredom might well have done it. THAT is a lesson in patience. I am often looking for the next trade and rarely just run one trade to expiry. However there is nothing wrong with that. Should your modus operandi be to collect premium every month, that is fine. KISS– Keep it simple,stupid. I do, however, believe that simply selling naked will eventually get you killed.

Is This Trade For Me? Is It For Every Market Type and Every Trader Type?

This is something to explore in the data and in yourself. Collecting 50 per ‘lot’ is certainly peachy. And if twice a year you got hit to the upside? No big deal. The downside needs some attention though. We will update this trade to expiry. We hope you are monitoring these trades yourselves. Enjoy.

Filed Under: InformativeStrategiesWeekly Trade Idea

About the Author: First found out about options in 1995.From the arcane magazine Exchange and Mart! First trade- a covered call on VOD in 1999. Made 10%,VOD almost doubled. That's when I realised I was not a good trader,and I was forgiven thanks to the amazing world of exchange traded options

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  1. Terrapin Trader says:

    After all these years of trading-some terrible trades some well executed,I can honestly say I am still not able to define myself as a trader. I can be fickle and just suddenly ‘see trades’ or I can be methodical and super cautious as I have been for almost a year.
    There is nothing in our options world thet remotely equates to the sickening gut-wrenching horrors of day trading and trying to,in essence, guess a direction. Go with the trend? Yeah sure except the one day I choose to go in big. Use indicators-yes I like them but feel they are of limited use.Gann, Fibonacci,pivots,Andrews pitchfork,S&R? Love them all but…
    Take a well reasoned position in options? Every time. Do not be fooled into thinking options are like those other ETPs (exhcnage traded products) or even spread betting.
    We can trade intra-day intra-week intra-month/year.
    Most people are too bone idle to bother with options- but I’m so lazy I can’t be bothered with anything else, after an exhasutive journey into trading. Yes I’d love a bit of intra-day rough and tumble,but I don’t think it’s remotely realistic to make serious coin. If it was all you need to do to make a million is double up on each trade 16 times,starting with £100.

  2. Terrapin Trader says:

    this trade is now worth 36- still 30 for the put, but only 6 for the call spread

  3. Terrapin Trader says:

    now 21 for the put and 6 for the call spread- easy isn’t it?

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