Trading Edge 2020 Portfolio -Trade #7- TLT - Short Call Spread
Ticker: TLT
Position:
- Sell to Open (STO) $155 Strike Call Option (6th March Expiry)
- Buy to Open (BTO) $156 Strike Call Option (6th March Expiry)
- This will result in a net credit to your account, i.e. you will be paid for this trade
- Remember to (STO) the HIGHER delta option, otherwise this will result in a debit and the trade will then be structured bullishly rather than bearishly
- I am looking to get set for this trade for no less than a $30 Credit (this mean the maximum loss on this trade is $70)
- Ideally look to get set around $35 or higher
- I will run a position size so that i am risking no more than $700
- I will update tomorrow with the specific fill prices, unless i was unable to get set at the desired level, in which case the trade is no longer valid
Profit/ Loss/ Exit:
- Max Profit will be the total premium collected from the outset (although i will book a Buy to close order at 80% of maximum premium)
- Maximum loss will be the width of the spread ($1.00) minus the premium collected, i.e. $30 credit on a $1.00 spread = $70 maximum loss for this trade
- There is no official exit, although you can use the break even point as an exit if you wish, i would rather structure the trade so that the risk is as close to a 1:1 Risk/ Reward, also due to the volatility, a stop would likely impact the success of this sort of trade
Rationale:
- I am not looking at going long on any trades, given the extreme volatility, however we can use the volatility to our advantage by selling options and collecting some premium
- TLT is very extended and looks to be overdue for some mean reversion
-TradingEdge
Position:
- Sell to Open (STO) $155 Strike Call Option (6th March Expiry)
- Buy to Open (BTO) $156 Strike Call Option (6th March Expiry)
- This will result in a net credit to your account, i.e. you will be paid for this trade
- Remember to (STO) the HIGHER delta option, otherwise this will result in a debit and the trade will then be structured bullishly rather than bearishly
- I am looking to get set for this trade for no less than a $30 Credit (this mean the maximum loss on this trade is $70)
- Ideally look to get set around $35 or higher
- I will run a position size so that i am risking no more than $700
- I will update tomorrow with the specific fill prices, unless i was unable to get set at the desired level, in which case the trade is no longer valid
Profit/ Loss/ Exit:
- Max Profit will be the total premium collected from the outset (although i will book a Buy to close order at 80% of maximum premium)
- Maximum loss will be the width of the spread ($1.00) minus the premium collected, i.e. $30 credit on a $1.00 spread = $70 maximum loss for this trade
- There is no official exit, although you can use the break even point as an exit if you wish, i would rather structure the trade so that the risk is as close to a 1:1 Risk/ Reward, also due to the volatility, a stop would likely impact the success of this sort of trade
Rationale:
- I am not looking at going long on any trades, given the extreme volatility, however we can use the volatility to our advantage by selling options and collecting some premium
- TLT is very extended and looks to be overdue for some mean reversion
-TradingEdge
Nota
Was able to get set for a $35 Credit on the spread, running 10x contracts, with a maximum risk of $65/ spreadTrade chiuso manualmente
Bought back the spread for $0.90 The strength in TLT has continued
For more analysis, consider joining our telegram group for trade updates and ongoing opportunities, link in my profile.
Pubblicazioni correlate
Declinazione di responsabilità
Le informazioni e le pubblicazioni non sono intese come, e non costituiscono, consulenza o raccomandazioni finanziarie, di investimento, di trading o di altro tipo fornite o approvate da TradingView. Per ulteriori informazioni, consultare i Termini di utilizzo.
For more analysis, consider joining our telegram group for trade updates and ongoing opportunities, link in my profile.
Pubblicazioni correlate
Declinazione di responsabilità
Le informazioni e le pubblicazioni non sono intese come, e non costituiscono, consulenza o raccomandazioni finanziarie, di investimento, di trading o di altro tipo fornite o approvate da TradingView. Per ulteriori informazioni, consultare i Termini di utilizzo.