Is this a good or bad trade?

It's midnight for me and decided to take a peak at market.

NQ futures currently at 13485, the option chain shows a wide 19 pt spread at this hour and the 13450 put is priced at bid 70/ask 89. So right now if I closed trade at offers I'd make 115 x 2 on futures trade plus 36 x 3 on options for a total profit of 338 pts.

Conversely if I hold until tomorrow's close these will be the profits (if any) at the different close levels.

If NQ closes at: profit points.
13787: +0
13687: +200
13600: +375
13500: +575
13450: +675
13400: +625
13300: +525
13150: +375
13000: +225
12975: +200
12775: +0

So, as of midnight if I continue to hold I'm hoping/gambling that NQ will stay between 13600 and 13150 at tomorrow's close to improve on current profits.
 
7out said:
Good trading is about always thinking about new ideas and talking it out since one can't argue with oneself. Up to now, never traded futures with options, saw something i liked and wanted another opinion. This is how you learn. I don't need to be taught trading, I have more than 25 years of mostly successful experience. Just wanted to hear pros and cons of trade to balance thought process. I simply thought of a trading plan to maximize profitability while limiting risk if possible. I try to balance the use of logic, technical analysis and statistics in my trading. Hence I write many trading formulas and always try to improve/improvise.
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In my opinion... Good trading is about a repeatable process not about shiny new things. What in your process for this trade is repeatable?

You had a profitable trade according to your plan, you adjusted your plan to try this new thing, now you have to be up at midnight to check if it's still profitable. To me that's madness.

That being said, selling covered options in exactly the way you did it *is* a legitimate way to make money. If you want to sell options as a way to add some extra juice to swing trades that you want to hold, OK that's fine. But plan it and do it consciously. There is always another trade.
 
Update: close the position now at 13 737.

Lost 275 points on the futures contract, hopefully we’ll still keep all the premium of 375 points on the puts sold.
 
nooby_mcnoob said:
In my opinion... Good trading is about a repeatable process not about shiny new things. What in your process for this trade is repeatable?

You had a profitable trade according to your plan, you adjusted your plan to try this new thing, now you have to be up at midnight to check if it's still profitable. To me that's madness.

That being said, selling covered options in exactly the way you did it *is* a legitimate way to make money. If you want to sell options as a way to add some extra juice to swing trades that you want to hold, OK that's fine. But plan it and do it consciously. There is always another trade.
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Yes, I had a profitable trade with almost 200 points locked up that I thought a bit about and decided to modify. As with my luck past month or so, not totally surprised trade faltered. There will be other trades. I still do think I took a viable risk to trade in a 200 point profit and possibly extract up to 475 more points from it. Unfortunately it didn't work out. Will likely make 100 points now (if options expire worthless today) or I can undo trade and buy back options and make approx. 50 points in total trade.

I did enjoy the process of thinking this out. I still believe the risk/reward here was warranted and I'd consider doing this again even on next trade. So I do feel it is repeatable. Was up at midnight, because I was up. These trades are not huge enough that I lose sleep or can't sleep while they're on.

Next trade on NQ is approaching too. Another high probability trade coming if during RTH NQ futures crosses above 13785 yielding a high % trade to the upside for 50 points.
 
7out said:
Update: close the position now at 13 737.

Lost 275 points on the futures contract, hopefully we’ll still keep all the premium of 375 points on the puts sold.
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This is where people leg in and out.

You believe in the short, so you sell short. You get to some target where you feel there will be a reversal which doesn't change the trend, so you sell puts.

You get the reversal you expect and you buy them back.

People do this, it's called wheeling. Just do it consciously.
 
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