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Sweating it out...

Options involve risk and are not suitable for all investors. Prior to buying or selling an option, a person must receive a copy of Characteristics and Risks of Standardized Options (the "ODD"). Copies of the ODD are available from your broker, by calling 1-888-OPTIONS, or from The Options Clearing Corporation, One North Wacker Drive, Suite 500, Chicago, Illinois 60606. Any strategies discussed, including examples using actual securities and price data, are strictly for illustrative and educational purposes. In order to simplify the computations, commissions, fees, and margin interest and taxes have not bee in included in the examples used in this presentation. These costs will impact the outcome of all stock and options transactions and must be considered prior to entering into any transactions. Investors should consult their tax advisor about any potential tax consequences. No statement within this presentation should be construed as a recommendation to buy or sell a security or to provide investment advice.

Friday was the release of the February employment report which was better than expected. This saw a bullish move on the OEX which resulted in the OEX closing above my current OEX Call BWB's short strike of $515 and upper expiration breakeven of $520.

This move translated to a paper loss on the current position as the OEX is outside the "mouse trap"

My options for repair are as follows:

1) Close March Call BWB position for loss and re-open another March Call BWB using higher strike prices

Close 505/515/530 March Call BWB
Open 520/530/545 March Call BWB

2) Roll March Call BWB position to April using same strike prices or higher strike prices

Close 505/515/530 March Call BWB

Open 505/515/530 April Call BWB
Open 520/530/545 April Call BWB

3) Sweat it out and wait for a pullback to bring my position back into profit:

- The OEX is currently showing as overbought
- Volume remained light showing that traders are still uncertain at buying into the current rally
- Lack of market moving economic data to be released in the upcoming week
- VIX is at 17.42. This puts the VIX back at support, which resulted in some selling back in mid-January
- VIX Fix at 0.71 (strong bearish signal)
- Tuesday is the 1 year anniversary of March 09 market lows. Traders may look for profit taking.
- Greece sovereign debt issues are still in the news with no clear bail out support from EU government.

I may also look at moving the March Put BWB's closer to the money in order to reset the mouse trap.

Wait and see. As always I will look at the risk first.


This post first appeared on A Boring Way To Make Consistent Profit From Tradin, please read the originial post: here

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Sweating it out...


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