Short Calls in QQQ

5 thg 1, 2018

QQQ have outperfomed SPY and with an IVR of 42 we are getting at least something for taking the risk against this Raging Bull Market.

Also we have divergence and already over 2 standard deviation move in the last 20 days to help us make the case to go short.

The Trade
42 days to Expiration
Short the 165 Calls
For $1.22 Credit
Probability of profit 72%


PS:
I treat this trade as a combination from the SPY ratio, since they are very highly correlated.

16 thg 1, 2018

Giao dịch đang hoạt động

Price have continued to move up, and against this trade.

I will start defending this trade by selling the 160 Puts for an additional $0.95 ea making a Strangle. This will improve our break even to the upside and our max profit, but now we are adding risk to the downside if it moves more than the expected move (denoted in the Gold Cone). However since is a hedge we are not using additional capital to do this.

Here is how the trade looks like now:

23 thg 1, 2018

Giao dịch đang hoạt động

Another strong day on QQQ and now it is above our break even. I can Roll the put up, but I don't want to make my profit zone too small and risk getting whipsaw, I will give it a little more time just in case.

24 thg 1, 2018

Giao dịch đang hoạt động

With the increase in volatilty I decided to roll and extend time to be right. I rolled the Feb 165 Call to March (Same strike) and the Feb 160 Put to the 165 March Put, making a Straddle at the 165 price (That's where we need the price to move). I got $3.25 for it, so now I would have to added to the previous credit received = $5.40 credit. Our max profit is $540 per contract at the 165 price.

25 thg 1, 2018

Ghi chú

With the increase in volatility, I am drawing the new expected move after my last adjustment. The riskiest side is of course to the upside where I have now a 54% chance of winning. To the downside, I have over 80%.

14 thg 2, 2018

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