My COVID-19 trade

[trade247]

Following on from this post I made a few days ago I decided to show one of my options trades yesterday on Wall Street as an option with a daily expiry. I thought we would have a short term swing and see a rally (before plummeting again) so I bought the call. Turns out it didn't go so well but I only lost 80 quid on a CALL on a market which fell 800+ and I was dealing £1 a point which wasn't too bad in my eyes!

I also posted a PUT trade a couple of posts down which ended up 820 quid from a £50 risk. Not bad (if you had called the direction right  ) so probably worth doing again.

Lets look at the US and do another? But risking £100 as it's early on in the day. Or we can look just before US open and see what's occurring.

1. If you think the market will rally you could buy the call at A (103.6)
2. If you think the market will fall you could buy the call at B (101.1)

both of these are daily options. as you're buying you cant lose more than that trade size, and given the moves we've seen that's the trade for me right now.

DAX down 2% but wall street not seeing it right now only down 0.6%, so I'm going with the PUT today. Waiting for retail to wake up and get scared.

[andysinclair]

Just looking options on IG for the first time...

If you buy the 26680 put at 101 then to make money you need the market to drop 246 points (to the strike at 26680) + 101 to cover your costs, so a net drop of 347 points (to 26579)  before you start making a profit?

[trade247]

breakeven would be 26680 - 101 = 26579

however the premium of the option can increase without that happening.

[trade247]

59 minutes ago, andysinclair said:

Just looking options on IG for the first time...

If you buy the 26680 put at 101 then to make money you need the market to drop 246 points (to the strike at 26680) + 101 to cover your costs, so a net drop of 347 points (to 26579)  before you start making a profit?

look at it this way - the prem of the strike 100 points above at 26780 are at 130.5 so assuming the current market was there (all other things being equal) you could reasonably assume the premium of the one we traded at 26680 would be about 130, which is a 30% return on your initial risk.

So it doesn't need to move significantly for the position to still make money.

hope that makes sense

[trade247]

of course....

The 27120 Call booking at 221 (up 2.2x so £220 running profit from ~ £100 risk)

The 26680 Put quoting 23 (off 75% or so, so a running loss of £77 on ~ £100 risk)

[andysinclair]

1 hour ago, trade247 said:

look at it this way - the prem of the strike 100 points above at 26780 are at 130.5 so assuming the current market was there (all other things being equal) you could reasonably assume the premium of the one we traded at 26680 would be about 130, which is a 30% return on your initial risk.

So it doesn't need to move significantly for the position to still make money.

hope that makes sense

Thanks for that explanation, I was thinking more about holding until expiry. I'm building a spreadsheet to visualise how the premiums move throughout the day and in relation to the market...no revelations so far!

[Guest Phil]

Following you trade from yesterday. Given today it’s been up and down what would you advise if someone followed this today?