That Was The Week Ending 16th March

                                                                                                                                                           A Lacklustre Expiry at ±7150

Monday saw a 30 point rise from the open,at which point our cheeky exit on Trade 70 was possible -a debit of 4.5 could have been closed out for >100% profit at 10. But that is not the point. We will come back to that later.

Political Turmoil

No need for specifics, but it may not have escaped anyone’s notice that dire events in the political world have no impact on the stock market. The once legendary trader Jim Slater used to say “buy when there is blood on the streets”. Callous, but correct. Look at what happened as the Iraq war started

 

 

 

 

 

Thanks CNN. So, the worst possible political outcomes including loss of life actually benefit the market. We all have a moral compass,so if we make money out of others’ misfortune we can always donate to a worthy charity. The stock market is incapable of morality, that does not make us any less decent or caring.

Back To Trade 70

We are not just here for the winning trades. You learn nothing when you win. So, let’s look at how things have gone by staying in the trade. We paid 33.5 for the 7350call and got 29 for selling the 6900 put. What could we do now the call is 17 but the put is still 29– the market dropped 60 points, volatility dropped, we are looking at a loss of 16.5 in total to close out.

Here’s some ‘options’ a) run the trade as intended b) sell the call and buy the 6950/6900 put spread for 14-limiting our losses to 1.5 and our put now has risk lowered to 6850 with possible value staying in the long 6950 put at expiry. c) sell 2x 7400 calls for (11.5×2) 23,roll the put down to 6600 with a little change to make the trade zero cost. d) double up the trade(Whaaaaaaaaaaaaat??????) Have the reasons for the trade changed? No?  Then double up for a credit of 12. check out the prices at http://data.theice.com/MyAccount/Registration.aspx

Enjoy! And remember the above are just a few ways to adjust

Filed Under: InformativeStrategies

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:

    Exit IS everything remember

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