Tuesday, 10 March 2009

Imprudence

Decided to place a risk reversal today- sold 3800calls and bought 3300 puts for a credit of 4.
This was prior to the US open which is always hard to guage, but the Ftse looked like it was struggling to hold 3600.
Bang! As the advert says, and the indexes smash up to the moon. These things happen and I am now at the mercy of the markets.(which I would be even if I was currently winning).
What if it all goes wrong? Well if FTSE starts to hit the 3800 level, and with expiry just over a week away, I will look at various ways of not losing money.
Call premium was overpriced,time decay is my friend,so let's hope for a plummet- we know it's waiting to happen even though the US again is as exuberant as a 6 week old puppy.
I am today however imprudent, and should have waited 10 minutes for a real juicy trade.

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