Tough times ahead for those with long positions.
The market closed higher today but when we look at the intra-day action then we can see that it could have easily ended up more than 2% lower.
Option traders must stay disciplined and find the right balance between adjusting and leaving positions alone.
Adjusting to one side may hurt the next day but if the opportunity is missed to adjust for a decent enough credit then it's a big opportunity cost.
Why?
That's because of the S curve of the delta.
Read more here: https://www.tycoonitos.com/community/stock-options/understanding-the-delta
So what's my trade for today?
#MOS (#TheMosaicCompany). This company is in the fertiliser business and has recently gone through the roof due to the war in Ukraine. Now that the stock has come to pre-war levels, I thought it's time to take a risk with a naked put.
The stats
Trade Type: Short Straddle
Strike: $35
Expiry: 19 Aug
Delta: 15
IV Rank: 67.2
Premium: $0.94
Cap Req: $352
Annualised Prof at Expiry: 217%
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.
https://www.tycoonitos.com/community/market-comments/market-comments-20220226
https://www.tycoonitos.com/community/market-comments/market-comments-20220419
https://www.tycoonitos.com/community/market-comments/market-comments-20220613
https://www.tycoonitos.com/community/market-comments/market-comments-20220420
Nice winner!
Closed at $0.69 for an annualised profit of 864%.