Options Trade #35 - SPY Tactical Strangle


VTS Community,

The current SPY Tactical Strangle I have open within the Discretionary Options Strategy needs to be adjusted.  When markets go up from the point of opening these types of trades, they typically don't make a whole lot of profit.  They do much better when the market goes down from the point of opening them.  The reason is because they are what's called Vega positive trades, meaning they profit when volatility increases.

If you want to read more about Vega and the rest of the important option Greeks, check out my article here.

So the market has moved since the trade was opened which is good for the Delta or price component, but because markets went up rather than down, volatility has dropped a bit and essentially cancelled it out.  

The trade is basically break even right now, but I'd like to close it and reposition a new one around today's price.  The easiest way for beginners would just be to close the current one, and then afterwards, open a new one.

SELL to CLOSE 1 x 15 Mar 19' SPY 250 PUT SELL to CLOSE 1 x 15 Mar 19' SPY 275 CALL Credit:  ~ 4.30

then afterwards:

BUY to OPEN 1 x 18 April 19' SPY 255 PUT BUY to OPEN 1 x 18 April 19' SPY 283 CALL Debit:  ~ 4.45

*  If you are familiar with your trading software, you can also do what's called "rolling" the trade.  Essentially you just highlight the current trade, create rolling order, and fill in the new information.  Change the expiry date and the strikes, and you can execute this type of rolling in 1 trade rather than 2.  

**  But if you don't know how to do that it's fine, you can just close and re-open easy enough and figure out the rolling another time.  


Current trades:



Also side note, the video I had the slight editing mishap with is now ready.  I talk about last years "Volpocalypse" event, what caused it, and 5 ways investors can potentially insulate themselves against future events like that.

Not all my videos are of equal importance, but I do believe this one is worth watching as the 5 tips can apply to ALL styles of investing.  They are just good rules of thumb to keep in mind as we navigate these unruly markets.




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