This week I have closed the short put options at 2,750 points that will expire end of October. Now, there is only 2 October long put options at 2,950 that are almost worthless for my December strategy. The premium is already very low and I wanted to reduce risk on the downside a bit.
At the moment it looks like we will keep on moving higher -- but as usual -- things can change from one day to another.
That is why I will keep the ball low and make sure to reduce risks as fast as possible.
Currently my break even points are around 2,900 and 3,400 points in EuroStoxx 50. So looking at a price of 3,200 at the moment, we are pretty comfortably situated in the range!
Showing posts with label Option Trades. Show all posts
Showing posts with label Option Trades. Show all posts
2015/07/17
Adjusting downside protection and thoughts about the upside
The EuroStoxx 50 Index is up to almost 3,700 points after its last low at 3.300. That's an upswing of 12 % in less than a week of time.
After I have rolled my put protection in a quite unfortunate time, I closed my the short put side of my bear put spread at 2,900 points for the price of just 20 EUR today. That leaves me with two long puts at 2,700 and 2,900 points with almost no value. I will keep those puts as protection for the next 3 weeks. I don't see any value in rolling them up or out right now, although a long put for September at 3,200 would only cost me 100 dollars.
As the Index is above my next milestone at 3,650 points I am supposed to sell my upper put for the 3,750 straddle. That would be close the 2015 high around 3,800 points. My problem is that volatility is really low around 18 at the moment, so premium received will also be little with around 1,500 EUR at the moment.
That is the reason why I chose to wait after the weekend to see where we are heading to. If the ESTX50 keeps on moving higher, I will have to sell the put and the call option right away. I don't want to take the risk to be caught in the short put in the next down swing without the extra premium of the short call.
Also, I will buy put protection for the straddle somewhere in the range of 3,200 to 3,300 points.
On Sunday I will also post my next performance update. I am really curious to see how the strategy is doing!
I chose to follow the plan and sell the short put at 3,750 for a premium of 1,550 EUR already before the weekend. Now, I am thinking to add the short call option, too, but again, it's not yet time for this step. Patience is king when it comes to option writing. Lower break even now at 3,270. Upper break even at 3,870 points.
After I have rolled my put protection in a quite unfortunate time, I closed my the short put side of my bear put spread at 2,900 points for the price of just 20 EUR today. That leaves me with two long puts at 2,700 and 2,900 points with almost no value. I will keep those puts as protection for the next 3 weeks. I don't see any value in rolling them up or out right now, although a long put for September at 3,200 would only cost me 100 dollars.
The upside straddle at 3,750 points
As the Index is above my next milestone at 3,650 points I am supposed to sell my upper put for the 3,750 straddle. That would be close the 2015 high around 3,800 points. My problem is that volatility is really low around 18 at the moment, so premium received will also be little with around 1,500 EUR at the moment.
That is the reason why I chose to wait after the weekend to see where we are heading to. If the ESTX50 keeps on moving higher, I will have to sell the put and the call option right away. I don't want to take the risk to be caught in the short put in the next down swing without the extra premium of the short call.
Also, I will buy put protection for the straddle somewhere in the range of 3,200 to 3,300 points.
On Sunday I will also post my next performance update. I am really curious to see how the strategy is doing!
Update
I chose to follow the plan and sell the short put at 3,750 for a premium of 1,550 EUR already before the weekend. Now, I am thinking to add the short call option, too, but again, it's not yet time for this step. Patience is king when it comes to option writing. Lower break even now at 3,270. Upper break even at 3,870 points.
2015/07/09
Roll-out of Put Protection into August
The market volatility stays high as the July expiration moves closer. Because of that I have decided to roll my long-put protection out into August and add a bear put spread for extra protection.
The problem was that prices for the put at the 3,100 strike was fairly low when I opened it in June. Now, those puts value has risen by 50 % and next months expiration is even more expensive.
My strategy is focusing on getting protection for about 100 Euro. For that price I could only buy puts at 2,700 points which is by far too low based on my actual break even points around 3,100.
That's why I decided to add extra protection using bear put spreads. So I bought more Puts at 3,000 points and sold the complimentary amount at 2,900 points. In worst case they will pay almost 1,600 EUR and cover some of the losses.
Based on my current position with two open straddles at 3,350 and 3,550 I was supposed to buy two long puts. In fact, I sold my July protection for a profit at 151 EUR. For August I added two long puts at 2,700 for total cost of -194 EUR after commissions. For extra downside protection I bought two bear put spreads for a debit of 538 EUR - 822 EUR = -284 EUR after commissions.
All in all I paid 327 EUR for August protection.
I am planning to close the bear put spreads if EuroStoxx50 rises above 3,450 points. But that depends on the general market conditions after July 17.
The problem was that prices for the put at the 3,100 strike was fairly low when I opened it in June. Now, those puts value has risen by 50 % and next months expiration is even more expensive.
My strategy is focusing on getting protection for about 100 Euro. For that price I could only buy puts at 2,700 points which is by far too low based on my actual break even points around 3,100.
That's why I decided to add extra protection using bear put spreads. So I bought more Puts at 3,000 points and sold the complimentary amount at 2,900 points. In worst case they will pay almost 1,600 EUR and cover some of the losses.
Based on my current position with two open straddles at 3,350 and 3,550 I was supposed to buy two long puts. In fact, I sold my July protection for a profit at 151 EUR. For August I added two long puts at 2,700 for total cost of -194 EUR after commissions. For extra downside protection I bought two bear put spreads for a debit of 538 EUR - 822 EUR = -284 EUR after commissions.
All in all I paid 327 EUR for August protection.
I am planning to close the bear put spreads if EuroStoxx50 rises above 3,450 points. But that depends on the general market conditions after July 17.
2015/07/08
Adjustment of ESTX50 Sep 15 Butterfly
During the huge drop yesterday, I have sold the second leg of the 3,350 butterfly. The short put with the strike same strike at 3,350 points like the call that I have sold last week earned a premium of 1,631 EUR. Total premium earned increased to 6,921 EUR.
Currently, the broken wing butterfly consists of two September straddles at 3,350 and 3,550 points and one long put 3,100 points with expiry in July.
The lower break even point is at 3,103 points and the upper break even is on 3,796 points. Maximum profit of 4,921 EUR would be earned if the EuroStoxx50 closes between 3,350 and 3,550 points on September expiration.
Upcoming adjustments are to open two long put positions for August as crash insurance. If the ESTX50 drops below 3,250 another call will be sold at the strike of 3,150 to extend the profit range. On the upside we do have plenty of buffer at the moment.
Currently, the broken wing butterfly consists of two September straddles at 3,350 and 3,550 points and one long put 3,100 points with expiry in July.
The lower break even point is at 3,103 points and the upper break even is on 3,796 points. Maximum profit of 4,921 EUR would be earned if the EuroStoxx50 closes between 3,350 and 3,550 points on September expiration.
Upcoming adjustments are to open two long put positions for August as crash insurance. If the ESTX50 drops below 3,250 another call will be sold at the strike of 3,150 to extend the profit range. On the upside we do have plenty of buffer at the moment.
2015/07/01
First Adjustment of ESTX50 Sep 15 Butterfly
Today the next step of the Butterfly Strategy has been triggered. EuroStoxx 50 closed yesterday below 3,450 points giving the signal to sell the first leg of the 3,350 straddle. In hindsight it looks like the market is going to move more up than down after the last days of correction. But so be it, nobody knows the future.
In fact, I added another 2,248 EUR to the premiums earned. The total premium income is now 5,205 EUR. The new break even points are at 3,029 points and 3,710 points.
The next step of the strategy will be to sell the put option at 3,350 points and the call option 3,150 if the EuroStoxx 50 closes near 3,350 points. In case the EuroStoxx 50 moves up to 3,650 the next put option will be sold at 3,750 points.
The insurance at 3,100 points will expire in 3 weeks. Until then we have strong market crash protection. New put options will be bought in the third week of July.
In fact, I added another 2,248 EUR to the premiums earned. The total premium income is now 5,205 EUR. The new break even points are at 3,029 points and 3,710 points.
The next step of the strategy will be to sell the put option at 3,350 points and the call option 3,150 if the EuroStoxx 50 closes near 3,350 points. In case the EuroStoxx 50 moves up to 3,650 the next put option will be sold at 3,750 points.
The insurance at 3,100 points will expire in 3 weeks. Until then we have strong market crash protection. New put options will be bought in the third week of July.
2015/06/23
Sell to open Butterfly on EuroStoxx 50 for September 2015
Yesterday, I have opened a butterfly for September 2015 expiration. The strike price for the straddle is 3,550 points. The insurance is a one month out long put for July on 3,100. The premium earned is 2,957 Euro after commissions. The break even points are 3,845 and 3,254 points.
Reason for the trade was the strong opening gap of more than 1,500 points after friday closing price of 3,450. The result is a huge volatility of 28 points in VSTOXX. I expect the EuroStoxx 50 to calm down after a few day leaving me with a high premium and buffer.
Adjustments have to be made if the index rises above 3,750 points. Then a new straddle on that level for September will be sold.
The reason I don't buy a long call on the upper level is the strategy to extend the trading range with new straddles. The long put will always be bought for one month expiration. The only goal is to insure huge market drops that could wipe out the portfolio. If the index will decline slowly, the range will be adjusted with new straddles at 3,350 points.
Reason for the trade was the strong opening gap of more than 1,500 points after friday closing price of 3,450. The result is a huge volatility of 28 points in VSTOXX. I expect the EuroStoxx 50 to calm down after a few day leaving me with a high premium and buffer.
Adjustments have to be made if the index rises above 3,750 points. Then a new straddle on that level for September will be sold.
The reason I don't buy a long call on the upper level is the strategy to extend the trading range with new straddles. The long put will always be bought for one month expiration. The only goal is to insure huge market drops that could wipe out the portfolio. If the index will decline slowly, the range will be adjusted with new straddles at 3,350 points.
Subscribe to:
Posts (Atom)