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BookingAlpha Option Trading Advisory

Monday, October 31, 2011

November SPY position closed

Demo Trading:

The trade open here as part of an adjustment was closed today as the markets went down yielding a nice profit for this bearish position (Bull Call Spread).
The trade was as follows:

Buy to Close 12 SPY Nov 133 Call @0.35 (Initially Sold @0.83)
Sell to Close 12 SPY Nov 135 Call @0.15 (Initially Bought @0.39

So, this trade had been open for a credit of 0.44 and was closed for a debit of 0.20, locking 0.24 in profit. That is 0.24 * 100 * 12 = $288. I had set a pending order a few days ago to Liquidate the whole credit spread for a debit of 0.20. The order was Good Till Cancelled (GTC) so it would never expire unless executed or manually cancelled by me. This way one can work and not be attached to the trading platform. You can see a more comprehensive explanation of this technique here.

I decided to lock in this profit in fears of another market rally. So as of now, two more trades remain open a Credit Call Spread in the QQQs and a Credit Put Spread in SPX well below the market. As for the QQQs position I have set a pending order to liquidate it as soon as it is worth 0.10 per vertical, effectively locking 0.23 out of the initial 0.33. But it all depends on how the markets move, if the downward move tomorrow is fast I will probably cancel the pending order with the goal of letting this position lose even more value by time decay.

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