The market, once again, did not go anywhere and am increasingly nervous about it.
A couple of weeks ago I purchased a put option against SPY expiring in April and within a few days I was able to close it with a nice profit even though my intention was to just have protection against a sudden downwards move.
Now I am considering doing it again but probably go further out, perhaps to May or June. The volatility is so low that these options are relatively cheap.
Here is an example of the May $370 put. It closed at $6.45 today but it was over $8 earlier the day. In fact, it was over $10 only 4 trading days ago.
For those, who are new to my daily market comments, I place and document one of my options trades each day with the objective of helping everyone learn how to trade options.
What's my trade for today?
#IBM earnings play with a calendar spread. I sold the Jan 27 $135 put and purchased the April $135 put. The idea of these trades is to take advantage of the volatility difference between the closer expiration and the longer expiration. If the move is favourable then my short position will expire worthless while my long position should retain most of its value.
Trade Type: - Short Jan 27; Long Apr
Expiry: 27 Jan
IV Rank: 47.6
Cap Req: $361
Annualised Prof at Expiration: ?%
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.