Comments on: Option Trade: Sold SLB Strangle http://mytradersjournal.com/stock-options/2009/05/04/option-trade-sold-slb-strangle/ Investing in Stocks Through Options Thu, 18 Mar 2010 01:55:21 -0400 http://wordpress.org/?v=2.8.6 hourly 1 By: Joe http://mytradersjournal.com/stock-options/2009/05/04/option-trade-sold-slb-strangle/comment-page-1/#comment-5927 Joe Tue, 05 May 2009 00:29:19 +0000 http://mytradersjournal.com/stock-options/?p=2425#comment-5927 Sounds good, I should consider your trade style more. Right now I am in "Gun Slingin'" mode and doing pretty well but I might "blow myself up" chasing the premiums. I am rolling down some FAZ puts today, I got smoked a little on the Financials action. Good luck out there, its a jungle. :) Sounds good, I should consider your trade style more. Right now I am in “Gun Slingin’” mode and doing pretty well but I might “blow myself up” chasing the premiums. I am rolling down some FAZ puts today, I got smoked a little on the Financials action. Good luck out there, its a jungle. :)

]]> By: Alex Fotopoulos http://mytradersjournal.com/stock-options/2009/05/04/option-trade-sold-slb-strangle/comment-page-1/#comment-5925 Alex Fotopoulos Mon, 04 May 2009 22:50:46 +0000 http://mytradersjournal.com/stock-options/?p=2425#comment-5925 Thanks for the comments guys. I don't need to find overly volatile stocks to trade options on. I'd rather find trades I can make a safer profit on. 45% return is quite nice to me. 30% works fine too, assuming I don't take a full profit on the trade. I think Mule65's comments explain why I made the SLB trade the way I did. Remember our comments exchange last week, I prefer higher probability trades over higher return. I checked the put and call spreads before I made this trade and opted for my route since I could just as easily see SLB pull back some by June expiration as I could see it go up a little further. Thanks for the comments guys. I don’t need to find overly volatile stocks to trade options on. I’d rather find trades I can make a safer profit on. 45% return is quite nice to me. 30% works fine too, assuming I don’t take a full profit on the trade.
I think Mule65’s comments explain why I made the SLB trade the way I did. Remember our comments exchange last week, I prefer higher probability trades over higher return. I checked the put and call spreads before I made this trade and opted for my route since I could just as easily see SLB pull back some by June expiration as I could see it go up a little further.

]]> By: mule65 http://mytradersjournal.com/stock-options/2009/05/04/option-trade-sold-slb-strangle/comment-page-1/#comment-5923 mule65 Mon, 04 May 2009 20:09:54 +0000 http://mytradersjournal.com/stock-options/?p=2425#comment-5923 Here's is Alex's P&L: Price Profit/Loss $35.00 ($1,340) $40.00 ($340) $41.70 $0 $45.00 $660 $50.00 $660 $55.00 $660 $58.30 $0 $60.00 ($340) $65.00 ($1,340) Here’s is Alex’s P&L:

Price Profit/Loss
$35.00 ($1,340)
$40.00 ($340)
$41.70 $0
$45.00 $660
$50.00 $660
$55.00 $660
$58.30 $0
$60.00 ($340)
$65.00 ($1,340)

]]> By: mule65 http://mytradersjournal.com/stock-options/2009/05/04/option-trade-sold-slb-strangle/comment-page-1/#comment-5922 mule65 Mon, 04 May 2009 19:50:07 +0000 http://mytradersjournal.com/stock-options/?p=2425#comment-5922 Joe, doesn't SLB has to move up fast to make money on that $1.85 credit spread trade? Price Profit/Loss $45.00 ($1,260) $47.50 ($1,260) $50.00 ($1,260) $52.50 ($260) $53.15 $0 $55.00 $740 $57.50 $740 $60.00 $740 Joe, doesn’t SLB has to move up fast to make money on that $1.85 credit spread trade?

Price Profit/Loss
$45.00 ($1,260)
$47.50 ($1,260)
$50.00 ($1,260)
$52.50 ($260)
$53.15 $0
$55.00 $740
$57.50 $740
$60.00 $740

]]> By: Joe http://mytradersjournal.com/stock-options/2009/05/04/option-trade-sold-slb-strangle/comment-page-1/#comment-5921 Joe Mon, 04 May 2009 16:22:40 +0000 http://mytradersjournal.com/stock-options/?p=2425#comment-5921 Alex, This isn't a criticism, just a comment. The way I see this trade, you are locking up $9,000 if SLB drops or $11,000+ if SLB takes off. This for a credit of $646 but keeps you "pinned down" for 46 days until expiration. That is an efficiency of 5.5% to 7% or an Annual ROR of 45% to 51% if the trade works for you and the options expire worthless. (45% ARoR is OK for me :)) Have you looked at higher volatility stocks like LVS? I guess my point is, you could be more efficient with 9 - 11K$. Or, since you like SLB, the credit Put spread (Sell May 55 Put @ 2.5 and Buy the May 50 Put @ .65 for a credit of $1.85 ?? If you sold 4 contracts of each, you'd collect $740 and only be pinned down for 11 more days?? That is an efficiency of 8.22% or 269% Annual RoR. Alex,
This isn’t a criticism, just a comment. The way I see this trade, you are locking up $9,000 if SLB drops or $11,000+ if SLB takes off. This for a credit of $646 but keeps you “pinned down” for 46 days until expiration. That is an efficiency of 5.5% to 7% or an Annual ROR of 45% to 51% if the trade works for you and the options expire worthless. (45% ARoR is OK for me :) )

Have you looked at higher volatility stocks like LVS? I guess my point is, you could be more efficient with 9 – 11K$. Or, since you like SLB, the credit Put spread (Sell May 55 Put @ 2.5 and Buy the May 50 Put @ .65 for a credit of $1.85 ?? If you sold 4 contracts of each, you’d collect $740 and only be pinned down for 11 more days?? That is an efficiency of 8.22% or 269% Annual RoR.

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