Finally we are seeing the VIX creeping up and the SKEW is also above 120 again.
The SKEW is measuring the risk of outlier move, or in other words, the risk of larger than expected move but it doesn't tell us the direction.
However, if you ask me, I would say the risk is far greater to the downside but I don't have a magic ball either.
On my strangles, I am keeping my put side further away from the underlying prices and keeping a very close eye on my buying power.
For those, who are new to my daily market comments, I place and document one trade a day with the objective of helping everyone learn how to trade options.
What's my trade for today?
#AA (#Alcoa) earnings play with a strangle. I had the same play last April and it took me a fair bit of time to recover from it but just like the waves of the ocean, the market conditions always change and what did not work out 9 months ago may work out this time.
The stats
Trade Type: Short Strangle
Strike: $45 / 65
Expiry: 17 Feb
Delta: -11
IV Rank: 19.1
Premium: $1.2
Cap Req: $535
Annualised Prof at Expiration: 273%
IMPORTANT: Studying previous trades provide the opportunity to everyone to learn a great deal so I encourage you to click on the links below and digest the info.
Closed:
https://www.tycoonitos.com/community/market-comments/daily-trades-20230104
https://www.tycoonitos.com/community/market-comments/daily-trades-20230112
Rolled:
https://www.tycoonitos.com/community/market-comments/market-comments-20220421
Watch more detail:
Let me know what you think.
Perfect trade!
Closed at $0.85 for an annualised profit of 2388%.