BLK: how to set up a base options trade for a big moveBlackrock: this is just a fantastical example on how to setup a base options trade for a big move. I am not actively trading BLK currently, too rich for my blood, lol. But for informational purposes, I wanted to explain a certain options strategy angle. I call it the big squeeze & eliminate theta strategy. haha
1/15/21 expiry: because printed BLK earnings dates are 12/12, 12/14 & 12/20 as far as I can find so it's in range.
*opening trade*
buy $660 call = $46.90, Delta = .73, Theta = .31, Vega = .72, OI = 284
buy $720 put = $38.60, Delta = .64, Theta = .32, Vega = .80, OI = 26
sell $740 call = -$7.95, Delta = .24, Theta = .26, Vega = .67, OI = 59
sell $640 put = -$7.85, Delta = .19, Theta = .27, Vega = .59, OI = 251
total: $69.70
max risk: $9.70 - 14%
max reward: $1.30 - 2%
Beginning result = medium risk, low reward, compared to the capital investment. Initially not worth it yet, with a 7 : 1 risk : reward ratio
*on going trade*
Because the ATR is at $14.40 you now have the flexibility to buy or sell, to open or close, positions in these specifically chosen strike prices over the course of the next 5 calendar weeks leading up to 1/15/21 expiry.
As you gain better insight into the underlying security, in this case BLK, you should be more accurate in your other strike prices and expiry dates, entries and exits.
There will be plenty of opportunities to start to make this base trade more profitable or more risky.
Using different time frames, doing your homework, waiting for premium signals, you can easily reduce the risk and add to the profit along the way.
VPVR settings: 52 because my view is showing 52 weeks
ATR settings: 23 because there's about 23 trading days left until expiry
pi RSI setting: default because Archimedes constant algorithm pi 3 14 15 92 has accurately guided my trades price action
Fibonacci VIP: default because the Fibonacci sequence 5, 8, 13, 21, 34, 55, 89 for volume ema has accurately guided my trades
Fibonacci MA7: default 21, 34 with common 50, 100, 150 ema's because BLK back testing responds most accurately to these parameters
Do your own due diligence, your risk is 100% your responsibility. You win some or you learn some. Consider being charitable with some of your profit to help humankind. Small incremental steps work : If you double a penny for a month it = $5,368,709. Good luck and happy trading friends...
*3x lucky 7s of trading*
7pt Trading compass:
Price action, entry/exit
Volume average/direction
Trend, patterns, momentum
Newsworthy current events
Revenue
Earnings
Balance sheet
7 Common mistakes:
+5% portfolio trades, risk management
Beware of analysts motives
Emotions & Opinions
FOMO : bad timing
Lack of planning & discipline
Forgetting restraint
Obdurate repetitive errors
7 Important tools:
Trading View app!, Brokerage UI
Accurate indicators & settings
Wide screen monitor/s
Trading log (pencil & graph paper)
Big organized desk
Reading books, playing chess
Sorted watch-list
Checkout my indicators:
Fibonacci VIP - volume
Fibonacci MA7 - price
pi RSI - trend momentum
www.tradingview.com
