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I'm still exiting. And here is a perfect example of why.
Legged into short CL Sep 80/130 strangle for .05 for each side on 5/22. Immediately placed GTC order to leg out at .02 for each side. Got filled early June.
If I had kept the 130s the price is now .13.
This doesn't happen a lot, but it can be a killer when it does. So I decided it is better to take the VG ROI now and maybe even just have money in cash or low ROI positions than to risk position going far against me.
Hi Ron, I am new to this thread. Have been trading (writing) Dax , Ftse & Dow Options for a number of years. I haven't been through the full thread but do you have a specific strategy for triggering a trade and most importantly a solid proven method for exiting a trade before it becomes an account blower?
The reason I ask is that over the years I have had great runs and then been hit really hard by the one offs which crop up every once in a while. (sufficient to blow the account.
If there's an area in the thread I could that discusses could you point me in the direction. Best regards.
On the first page in post#2 is a Quick Summary. In there you will find many of the highlights of this thread. Also be sure to check out the Word doc by Iridium at the bottom of the Quick Summary.
After that read the thread. Many great points in it.
Here's a suggestion. In order to make the thread easier to read and shorter, instead of making a new post thanking someone, you should just click the Thanks button in the lower right of a post.
FWIW There is an opportunity to sell milk (Class III) options right now. Sell the Aug 18.75 put for 0.04 or $80. Symbol DA on some systems. There are 150 bid there now. I suspect the person bidding is taking profit on the 362 options that traded (OI increase) on June 3rd between 0.23-0.29.
If kept to expiration the ROI would be about 3% (IM=298 today but should be lower tomorrow). I would recommend buying back at .01 which shouldn't take too long to get there. That should easily get your monthly ROI over 5%. The Joly 18.75s are priced at 0.005 or cabinet.
Somewhat related - the madness of futures options margins at Interactive Brokers:
The option referenced above has a $335 IM at IB. That's about 10% above SPAN IM. Not bad given their reputation as an unfriendly broker for option sellers.
But... I was looking at a nat gas put sale today and the IM was $2000. SPAN IM (risk + premium) was $1010, so they're 100% above some of their competitors.