Well it's expiry week and these have their own character which I have studied for some time- so how do I trade it?
I had expected, nay demanded an up day today to sell some calls, but it was not to be. I should just sell some puts, but we are at such a stretch on the scale of being overbought, I want to wait for a better opportunity to sell puts-this may not happen, so I am prepared to take a tiny loss on a zero cost trade- a ratio put spread for zero (cost = commissions).
bought 4200 puts and sold 4100 puts x2.
This would be great if F tanks, and I'm in profit all the way down to 4050- about 9% from current level. Problem is ........
I need a substantial drop, which probably won't happen, but my gut tells me that Dow might plummet later.
Either way I didn't fancy having naked puts hanging there in case some horrible things happen in the interim.
As I write F is only down about 30, making it look like 4400 was the low- again I was being 'clever' and expecting it to drop below just to test that level.
I do have plans for my put trade and have a variety of choices if market moves down.
Monday, 11 May 2009
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