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Friday, May 10, 2019

Options trade: SPX short call option (bearish)

Tuesday, 4/2/2019 (9:34:14 am, PT)

sell short -1 May 17, 2019  2950 call option at $11.10

Facts:
  • 20 delta
  • stochastics in "overbought" region
  • 45 days 'til expiration (ideal)
  • credit received:  $11.10 x 1 x 100 = $1110


Friday, 5/10/2019 (8:01:45 am, PT)

buy back short call option at $0.75 to protect my profits and remove the risk

COMMENTS:
  • After I placed my bearish trade, SPX continued to rise (bad!)
  • On 5/1/2019, SPX hit a new all-time high of 2954.13 (bad!)
  • On 5/1/2019, my short call option was in-the-money by only 4.13 but it was trading at $26.36 (my "paper loss" was $1526 at the time)
  • Luckily for me, SPX dropped after hitting the new all-time high on 5/1/2019
  • On 5/10/2019, at 8:01:45 am, PT, SPX hit an intraday low of 2825.39 and I was able to buy back my short call option for only $0.75 ($75 for one contract)
  • It's a GOOD thing I closed my trade when I did, because SPX shot back up over 65 points right after I closed my trade!


PROFIT:  $1035

CLICK HERE to see the chart of SPX

CLICK HERE to see two videos of a similar SPX trade