We have the French election coming up and other than my trades on FXE I didn't have much on play for that.
The IV Rank on FEZ is pretty high at 77 and I am selling the strangle with 30 days to go. After the first part of the election we might get a decent volatility. I am betting that Euro companies won't be impacted as much and I can get paid on the expensive premium.
Sold the 35/36 Strangle for $2.03 per contract. 55% probability of profit.
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Being tested to the upside, I rolled up and out to get more credit and buy more time to be right. Rolled the Put side and we are now inverted with the 36 Call and 37 Put and added .65 cents per contract.
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We are down on this trade and FEZ continues to rally up before the election. IVR is still high at 47 and since my position is small and still have most of my capital in cash I decided to add another trade on top to move my break even up.
I added a Big lizzard (No risk to the upside) Selling the 40 Straddle and buying the 41 call. For a 1.77 credit. Now if we get a volatility crush then I can still make money on this trade.
Our new break evens are at $36.14 and 40.42
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We are showing a small loss on this trade, but we are in good shape. Volatility didn't came down as fast as I thought after the election, but we still have 70% chance to make money with our new setup.
We just need time to pass so that we collect some of the extrinsic value.
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Got to close this trade for a small win, after I was wrong on my initial trade. Options are awesome!
Nice work again and keep it coming! I appreciate your detailed trade ideas and how you have followed up to repair the first trade for round 1 of the elections. As a beginner I'm following along (slowly but surely). I put a 36/39/42 iron fly on FEZ just before the weekend with that decent IVR of 47%. An IV crush of 5-10% seems likely on Monday's open. Polls Friday showed 60% odds of Macron win.
AlexanderGotay
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@dime, Thanks for the comment. I think your trade is good and hopefully we get that IV crush on Monday, with some down or side movement.
andrej123456
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Hello. You look like a advanced trader. Could you write me how are you making your options and futures strategies ( what are you watching, analysing, indicators etc... ). I want to learn something new. Thank you.
AlexanderGotay
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@andrej123456, Sure.... Basically the strategy is trading as if you are the casino or an insurance company. You trade using the probabilities in your favor (with options you know the probabilities of winning before making the trade), prices of options are always "overpriced" so most of the time the side that is selling the option wins (That's why I am always selling options instead of buying them). Even if you have no idea what is going to happen you can make money. And If you have a directional assumption you can improve your chances of making money on every trade.
For example if you see a stock selling at $100 right now, you can sell the option of buying that same stock at lets say $95. In other words you are getting paid to buy it at a better price, if it doesn't get to that price you keep the money and if it goes down then you will have to buy it at that price (you get to keep the credit received anyway and improve your cost).
Of course its going to be impossible to for me to explain everything in a paragraph, but that can give you an idea of how to think and the way I like to trade. If you have specific questions in any of my trades just ask and I will do my best to explain it, until you get a clear concept. It might look complicated at first, but it really isn't and is for sure worth it. Good luck!