WATCH THE VIDEO HERE!
Trade 1 (11:08:46 am, PT)
sell -2 Jan 9, 2019 2610 calls at $1.25 (14.62 delta)
buy +2 Jan 9, 2019 2640 calls at $0.05 ("wings")
Comments
- The Federal Reserve released its minutes at 11 am, PT
- Margin requirements: (2640 − 2610) x 2 x 100 = $6000
Trade 2 (11:30:07 am, PT)
buy back both short calls (2610 strike) at $0.20 (to remove the risk and take profits)
PROFIT #1 (short calls only): $210
Trade 3 (11:48:57 am, PT)
sell -2 new calls (2600 strike) at $1.25 (19.18 delta)
Trade 4 (12:30:18 pm, PT)
buy back second set of short calls (2600 strike) at $0.30 (to remove the risk and take profits)
PROFIT #2 (short calls only): $190
TOTAL PROFIT: $210 + $190 − $10 (cost of the two long calls) = $390 (in about 90 minutes)
Comments
- I waited until after the Fed's minutes to place my first trade (I don't like uncertainty)
- After I bought back my first set of short calls, I was able to sell another set of calls for an additional credit
- SPX closed at 2584.96, so my short calls would have been fine in the end. However, I don't like to take unnecessary risk, so I always buy back my short options before expiration if possible
WATCH THE VIDEO HERE!
