Personal Trading, Could I do Better?

Terrapin Trader, ,

FTSE today-That Key Level Again

 

 

 

 

 

 

Hold to Expiry and Risk it All?

So, I have just closed out a Dec position part of which was the 7000 calls, as the expiry happens tomorrow at 10:00 am. I had some risk above 7100 which was roughly the previous high. Anyway I closed out and looking at my account this was a very modest month and I made a 4% return on capital employed-ie margin.  A younger  trader in my position might be a whole lot bolder.

Stress and How to Avoid it

Sometimes you just have to make a mental note of what you want from a trade. We aim to get paid to enter trades, or at worst get into trades for zero cost. There is less stress when you have already made a profit. Had I got max gains for this month I would have made about a 15% return, as I had a put strategy that was worth a chunk of change last week.( I got paid to take that trade too,it’s now worth zero).

Shorts can Help Pay for Your Longs- you know that!

A part of my trades, like many strategies is that you have a long component that can make more money when you close. The perfect example is a simple spread where you buy the higher strike put,for example and sell the lower one- the 6600/6500 put spread is 12.5-7.5=5. So if you fancy between now and January expiry(36 days) the FTSE will tumble to 6500, your 5 could become 100. 5 is a cheap trade so if you lost all of it,there’d be few tears. (A Jan 7350call is trading at 5). So you could sell that call and pay for your put spread, if you think FTSE will not hit 7350,and has a chance of dropping a fair chunk. Just a thought, not in any way a suggestion or recommendation. As always DYOR.

 

Published by Terrapin Trader

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

1 Comment

  1. Holding to expiry is a lottery-and when you are short( you have sold options) you have what is klnown as PIN risk- ie the underlying is ‘pinned’ to you. If you had sold some puts in BP, you might have BP stock ‘pinned’ to you.A short call in BP would mean selling the stock. In other words you are forced to buy/sell those shares. Most options expire OTM (out of the money), so they are worthless. The trick is knowing which ones to sell and which ones to buy! That is why you have to grow into trading,you need to develop a trader’s mind.

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