Two consecutive epic moves upwards and the VIX is down a bit but still high. I am not surprised about the direction of the move but certainly surprised about the size. For options traders, it can be challenging when the move is too large but fortunately after the bloody September I had several positions that benefited from the rally.
With the volatility (VIX) still high across the board, it is a good time to sell options but we have to be very careful with our selection. Strangles are always attractive but large swings in both directions can make our lives challenging.
I also used the rally of the past two days to roll my 'forever positions' (positions that I always have: QQQ, IWM, SPY) to November and widened out my strangles. It cost me a fair bit of premium but I still have plenty of premium left.
So what's my trade for today?
#WDC (#WesternDigital). The stock has seen better days and it just bounced off a major support line. At $33 it seems like a buy purely based on the past 10 years of price moves. The volatility is very high therefore the premium is also very attractive. I opted in for a $33 October put hoping that it will continue going up a bit more or at least stay around the current price level for the next 2 weeks. The earnings will take place on the 27th of October so hopefully I can close it prior to the earnings.
WDC Monthly Chart
Here is the daily chart that shows the rebound of the last couple of days.
WDC Daily Chart
Trade Type: Short Put
Expiry: 21 Oct
IV Rank: 83.9
Cap Req: $395
Annualised Prof at Expiry: 332%
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