Monday, June 21, 2010

SPY vertical

I sold (20) 116/117 SPY verticals for .24. Between not getting filled at .25 and paying commissions, the RoR is now only 28% instead of the perceived 33% if you get filled at .25. When you're playing probabilities and percentage, those are kind of significant numbers to give up in my mind. I would probably look to roll this out to August if it moves against me rather than take a loss. I would also look to roll in to an iron condor if we sell off in the next few days.


  1. I think this is a good trade. There is only a 20% chance being priced into the options market that the 16 strike will finish in the money. I think today's ralley over the whole chineese Yuan un-pegging was a bit over done. The key that I think many people missed when reading about this new was that it was a statment of intention and nothing has really happened yet.

    Furthermore the Chineese even said it themsleves that they want the increase to be gradual. To me I really don't see what changed, they are still going to control the exchange rate and keep it fixed at what ever level they feel they can. I think they just wanted to get people to shut up, which is why they made an official announcment.

  2. Maybe that's why by closing the market had realized what you've just said. Who knows. It's kind of scary if the market in general is acting off the word of communists who as you've said, can say anything they want, but what action have we seen in the past from them? Every major player in the global economy is forced in to playing this game. The US threatens Europe of what could happen if they don't print money, the Swiss are artificially devaluing their currency to keep pace with the Euro decline to make their exports stay attractive, the Chinese need to keep their currency week to keep exports up but at the same time try to act like that's not what they're doing. Germany and France hinted at leaving the Euro rather than pony up the majority of the risk of defending it. Big times chess matches being played right now.