Post by Admin on Jan 7, 2015 2:17:58 GMT
Initiated this trade to reduce loss on Previous Trade . see post stocktrades.freeforums.net/thread/9/uso-jan-bull-put-spread
1) Ticker Symbol:USO
2) Chart:
3) Entry/Exit: Strikes
17.50/17.00P 65% probability success
19.50/20.00C 84% probabaility of success
Using the normal distribution, we approximately sold a 0.5 STD low side and 1 STD high side.
There is an approximate 54% (84% x 65%) that the price will close between (this is the goal).
4) Strategy: Iron condor
5) expected duration: 4 days
yellow: 52w IV
upper yellow = 46.456
mid yellow: 31
lower yellow: 16.50
Total credit received: 0.11 after commissions. Closed out the 18.50/18.00 Bull put spread for a loss of 0.23. The reduced loss is 0.12. Not bad. This IC was placed on without actual analysis of the chart at end day. This was a mistake. If It had proper analysis, the strikes that should've been used are the 16.50/16.00 for a credit of 0.03 or 0.04 or even the 17.00/16.50 (although this carries much more risk than the 16.50/16.00). I am also debating whether or not I should've waited to sell the upper leg of the IC. The strikes chosen are also near the IV support ranges established earlier. However, USO is also in a free fall right now so the price movement is not as predictable. From the chart, generally you see that if you split the 52w IV ranges into 4.There seems to be price rebounds for USO at those points.
expectation for the future:
4 Day IV range (dark green):
High: 19.30
Low: 16.80
expecting 16.50 area to be a rebound area, at this point, I should look to sell a 16.00/15.50 put spread.
Lessons learned:
1) Do not rush into trade
2) trade was not executed as per strategy and was done so to reduce loss. Ideally you'd roll down your spread 1 or 2 strike points.
3) Pivot points may not exist where there is uncertainty in a stock i.e USO. These spreads are better used once established patterns.
Again, this is done to recover a bad trade.
1) Ticker Symbol:USO
2) Chart:
3) Entry/Exit: Strikes
17.50/17.00P 65% probability success
19.50/20.00C 84% probabaility of success
Using the normal distribution, we approximately sold a 0.5 STD low side and 1 STD high side.
There is an approximate 54% (84% x 65%) that the price will close between (this is the goal).
4) Strategy: Iron condor
5) expected duration: 4 days
yellow: 52w IV
upper yellow = 46.456
mid yellow: 31
lower yellow: 16.50
Total credit received: 0.11 after commissions. Closed out the 18.50/18.00 Bull put spread for a loss of 0.23. The reduced loss is 0.12. Not bad. This IC was placed on without actual analysis of the chart at end day. This was a mistake. If It had proper analysis, the strikes that should've been used are the 16.50/16.00 for a credit of 0.03 or 0.04 or even the 17.00/16.50 (although this carries much more risk than the 16.50/16.00). I am also debating whether or not I should've waited to sell the upper leg of the IC. The strikes chosen are also near the IV support ranges established earlier. However, USO is also in a free fall right now so the price movement is not as predictable. From the chart, generally you see that if you split the 52w IV ranges into 4.There seems to be price rebounds for USO at those points.
expectation for the future:
4 Day IV range (dark green):
High: 19.30
Low: 16.80
expecting 16.50 area to be a rebound area, at this point, I should look to sell a 16.00/15.50 put spread.
Lessons learned:
1) Do not rush into trade
2) trade was not executed as per strategy and was done so to reduce loss. Ideally you'd roll down your spread 1 or 2 strike points.
3) Pivot points may not exist where there is uncertainty in a stock i.e USO. These spreads are better used once established patterns.
Again, this is done to recover a bad trade.