Finally a nice drop in VIX, which tracks the market fear. It allowed me to close a few of my positions, but where do we go from here?
If we look at the VIX chart, we can see resistance at around the current level, however the cyclical spike is due next week.
What does this mean to options traders?
This is the time to reduce our portfolio exposure and reload when the VIX is up above 30 again. The challenge is that it's not guaranteed that it will happen and the current VIX level is still much higher than the historical mean, which is around 15.
So what's my trade for today?
Some major bank earnings already came out and exceeded the expectations. #WFC (#WelsFargoBank) is one of them. The strangle pays surprisingly high premium so I thought I try my luck here.
Trade Type: Short Strangle
Strike: $35 / 45
Expiry: 19 Aug
IV Rank: 33.4
Cap Req: $425
Annualised Prof at Expiry: 186%
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.
Let me know your thoughts.
Closed at $0.99 for an annualised profit of 169%.
Rolled up my put side to $40.5 for $0.39 credit.
Total credit: $1.39
Rolled up the put side to $38 for $0.24 credit.
Total credit: $1