Trading Edge 2020 Portfolio -Trade #7- TLT - Short Call SpreadTicker: 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tomorrow with the specific fill prices, unless i was unable to get set at the desired level, in which case the trade is no longer valid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
Shortcallspread
Close targets for sure profitsIf we break over 8000-8300 , i will close my positions at 9200 and 10200
Sugar going sidewaysSideway action as the trend slope of the trend has become steeper.
Not saying the uptrend is over, but stalling, especially since RSI and Stochastik start to indicate some divergence.
Short call spreads seems to be good risk/reward IMHO.
Wouldn't be buying puts as the premium will deteriorate as long as the market doesn't sell off.