From $1000 to ? Trading SPX Weeklys in my Roth
- Thread starter Trade Theory
- Start date
Sure, here's my second trade and my thought process in taking it.
Trade 2:
tIP BOT +1 BUTTERFLY SPX 100 (Weeklys) 17 JAN 20 3290/3305/3320 CALL @1.90 CBOE
Its a 15 point bullish butterfly centered around the weekly expected move in the SPX. The market is pricing in a $38 move between now and expiration and I'm betting we will move close to that. SPX is trading at 3265 so I centered my fly at 3305. I'm betting on the efficiency in the options market in the SPX specifically on Friday expirations.
tldr: Its a trend following trade betting implied volatility will be roughly equal to actual volatility.
Beautiful! You explain options extremely well! I've a hard time understanding others when discussing options, but your explanations I understand really clearly.
I've heard about butterflies before - had no clue what they were, but now from your succinct example I know what a butterfly is! The screenshot helped a ton too.
Thank you and would love to keep learning from your future trade breakdowns.
I've heard about butterflies before - had no clue what they were, but now from your succinct example I know what a butterfly is! The screenshot helped a ton too.
Thank you and would love to keep learning from your future trade breakdowns.
Trade 2 closed:
tIP SOLD -1 BUTTERFLY SPX 100 (Weeklys) 17 JAN 20 3290/3305/3320 CALL @5.10 CBOE
+$320 Profit - $4.14 Commission
Starting Balance: $1001.75
Current Balance: $1643.47
PnL: +$641.72 = Account up 64.06%
Nailed another fly right on the head. And who ever said trading a 12 VIX can't be fun? With the market relentlessly pushing to all time highs week after week, I'm certainly not going to try to fade this trend. I'm going to continue to be a net buyer of premium and keep my risk defined, across all accounts. It would have been much more profitable had the SPX took 1 more day to make its move, but hey...I can't really complain when my accounts up 60% in 2 weeks.
tIP SOLD -1 BUTTERFLY SPX 100 (Weeklys) 17 JAN 20 3290/3305/3320 CALL @5.10 CBOE
+$320 Profit - $4.14 Commission
Starting Balance: $1001.75
Current Balance: $1643.47
PnL: +$641.72 = Account up 64.06%
Nailed another fly right on the head. And who ever said trading a 12 VIX can't be fun? With the market relentlessly pushing to all time highs week after week, I'm certainly not going to try to fade this trend. I'm going to continue to be a net buyer of premium and keep my risk defined, across all accounts. It would have been much more profitable had the SPX took 1 more day to make its move, but hey...I can't really complain when my accounts up 60% in 2 weeks.
You are not allow to do that in a Roth.
When do you kill the trade if your bull thesis turns out to be wrong? Do you just let the whole structure expire and lose your initial premium
I treat it as a very binary trade. It will either expire worthless or close profitably. Usually I'll set a GTC closing order set to trigger as soon as the SPX hits my short strike minus $5. I prefer to close it manually but I always do the GTC in case I'm not watching the market at the time it makes its move. The closing order for my second trade was triggered as soon as SPX hit $3300.
We're on track to close this week significantly outside of where the implied vol was pricing us to go. That's the first time this has happened since August 2019. I'm not feeling good about placing the same trade on the SPX again this next week unless the market pulls back to around 3300 before today's close. I'll likely skip the trade and do some earnings plays this week on INTC, PG, AAL, ETFC and/or TXN instead.
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Mind sharing more in-depth stats about your trading? E.g., how many option trades do you place a month. Out of those (are they all binary?), what percentage a month end hitting your short strike minus $5/or you manually exit in profit? How many are losers?
Nah this journal is the only trade data I’ll be publicizing so I’m starting with a clean slate here. But what I will say is I’ve been trading options profitably for the past 3 years, with 2018 being most profitable, closely followed by 2019.