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July 31, 2013

$RUT Weekly Trade


Traders,
Russell 2000 Index is trading around 1050 and it looks like it might try to retest recent highs of 1056. Today we have FED meeting that can potentially move the market, so manage your size of trade accordingly. We are going to sell 1040 put and 1050 call that expire this week and buy 1040 put and 1050 call that expire next week, that makes it a double calendar. We are entering this trade for a debit and will look to make about 15% of margin (debit). Our stop will be around 20% loss of margin (debit). We will look to close out this trade before the close of trading tomorrow.
Trade: BUY +1 DBL DIAG RUT 100 (Weeklys) AUG2 13/AUG1 13 1050/1040/1050/1040 CALL/PUT/CALL/PUT @8.30 LMT
Margin: $830 per spread
Profit Target: $125 per spread (15% of margin)
Stop: $165 per spread (20% of margin)
Duration: 1-2 days


8/1/13 Update: This trade is closed for 7.23% loss.

July 22, 2013

$RUT Weekly Trade

Traders,

Russell 2000 Index is trading around 1053. We are up over 100 handles in 6/24 bottom with little to no pullbacks. Clearly the trend is still up, but a pause or a little back and fill would be healthy here. We are going to sell options that expire this week and buy options that expire next week (same strike, same quantity). We are selling this week's 1050 Put and 1060 Call and buying next week's 1050 Put and 1060 Call. This trade benefits from increase in implied volatility and passage of time (THETA). Best case scenario is RUT trades sideways over the next few days and we'll get out at our profit target. If RUT makes a big move in either direction we will have our risk management (STOPS) working.

Trade: BUY +1 DBL DIAG RUT 100 (Weeklys) AUG1 13/JUL4 13 1060/1050/1060/1050 CALL/PUT/CALL/PUT @8.60 LMT
Margin: $860 per spread
Profit Target: $130 per spread (15% of margin)
Stop: $170 per spread (20% of margin)
Duration: 2-3 days


7/25/13 Update: 
This trade is closed for 12.79% gain in 2 days.

July 16, 2013

Weekly Trade update 7/16/13


Traders,
Yesterday we entered RUT JUL4 13/JUL 13 1040 Put Calendar, average cost 4.20 per spread. After a small pull back in the markets today, this trade shows unrealized gain of 9.52%


Our profit target for this trade is 15%. Does this mean we should not take some profits on the way there and reduce risk? NO!! Anyone that wants to successfully manage risk should take profits when they're there. For example, this trade shows a closing price of 4.60 as of today's close. If we can take 1/2 position off for 4.60 debit (+.40¢) and take the other 1/2 position off for 4.80 (+.60) that's a total average gain of .50¢ (per contract) which is about 11.90% return on risk. The point is, don't let winners turn into losers, take profits along the way, and while you may not hit your profit target every single time, reducing risk will keep you in this game alot longer. 
We have orders to close a part of this trade at 4.50 and we were not filled. We will try again tomorrow and we should be completely out by Thursday.
Make sure to follow us on Twitter for entries, exits and/or updates.

July 15, 2013

$RUT Weekly Trade


  • Strategy: Calendar spread
  • Underlying: RUT
  • Trade: BUY +1 CALENDAR RUT 100 (Weeklys) JUL4 13/JUL 13 1040 PUT @4.25 LMT
  • Trade Price: 4.30 debit per spread
  • Margin: $430 per spread
Trade:

Risk Profile:

We are selling 1040 PUT that expires this week (Jul monthly) and buying 1040 PUT that expires next week (Jul4). Options that expire closer in time will decay faster than those that expire further out in time, so we're taking advantage of time decay here. Our goal would be to get out by Thursday with about 15% (of margin) profit or$65, and we don't want to lose more than 20% (of margin) on this trade or $85.

July 10, 2013

$RUT Weekly Trade


  • Strategy: Calendar spread
  • Underlying: RUT
  • Trade: BUY +1 CALENDAR RUT 100 JUL 13/JUL2 13 1010 PUT @4.10 LMT
  • Trade Price: 4.10 debit per spread
  • Margin: $410 per spread
Trade:

We are selling 1010 PUT that expires this week (Jul12) and buying 1010 PUT that expires next week (Jul20 - monthly). Options that expire closer in time will decay faster than those that expire further out in time, so we're taking advantage of time decay here. Our goal would be to get out by Thursday with about 20% (of margin) profit or$80, and we don't want to lose more than 25% (of margin) on this trade or $100.

7/10/13 Update: This trade is closed for 7.31% gain.

July 4, 2013

Weekly Trade update 7/4/13


Traders,
Last week's traded yielded a small gain after we converted our RUT 970 put calendar into 970/980 put diagonal. We did not enter a new trade because with July 4th holiday and Friday's Non Farm Payroll numbers that's due out in the morning. However, we will look to enter a new trade either Friday or early next week. We are going to keep an eye on RUT daily chart as we might be coming into some levels of resistance:

At the money (ATM) put calendar will be our weapon of choice and any spike in volatility should help to make this trade quick and profitable.
Make sure to follow us on Twitter for entries, exits and/or updates.