Post by Admin on Feb 2, 2015 11:29:12 GMT
This trade was a loss. No further analysis.
Unexpected 3 std move occurred with a 1% chance of probability. Debit spread was also entered without much analysis.
For future, Its best to initiate delta neutral strategies to offset each other. Ideally, have them on a separate weeks to take advantage. Ideally it may be beneficial to use a calendar straddle.
For example: BABA JAN 30 debit 99/98 call spread should've been offset by by a purchase of a Put equal distance away with a set close price. Stop loss on back month should be approx half of the expected move of the front month spread., which will be converted into a credit spread.
Do not use credit spreads for earnings play.
Unexpected 3 std move occurred with a 1% chance of probability. Debit spread was also entered without much analysis.
For future, Its best to initiate delta neutral strategies to offset each other. Ideally, have them on a separate weeks to take advantage. Ideally it may be beneficial to use a calendar straddle.
For example: BABA JAN 30 debit 99/98 call spread should've been offset by by a purchase of a Put equal distance away with a set close price. Stop loss on back month should be approx half of the expected move of the front month spread., which will be converted into a credit spread.
Do not use credit spreads for earnings play.