AlexanderGotay
Singkat

74% probability trade on QQQ (Synthetic Call Ratio)

NASDAQ:QQQ   INVESCO QQQ TRUST, SERIES 1
With equities still rallying I can redeploy another trade on the Q's. If it continues to go higher it will get to our max profit zone, if it starts to drop we don't have any risk and still make money. Worst case scenario is that we continue this nonstop rally without mercy then we would be basically short from 136.50 which would be at the all times high.

The trade: Synthetic Call Ratio spread on QQQ             for $.50 credit per contract.

Bought one 134 Call for every two 135 Call for a 2:1 Ratio spread with no risk to the downside and our max win at 135. Then bought the 141 Call to reduce the capital requirement, essentially making this a synthetic Call ratio spread.

By buying the delta .05 call we reduce our capital requirements for the trade from around $3k to $450 per contract and reduce our credit received by only $5 per contract. Pretty good trade off in my mind.

Our break even is at $136.5 giving us a 74% chance we make money on this trade.
Perdagangan aktif: With the down move this last couple of days we are already in profit, a couple of more days like this and we will get to our target.
Perdagangan aktif: After being winning on this trade, the Nasdaq decided to rally and challenge our break even. With 11 days to go I decided to adjust the trade (partial management) and closed the Vertical debit spread part of the trade (134/135 Call spread) for almost full profit of $90 per contract and closed the other lone call for $6.

Then Roll the other Challenged Calls (@135) to Jun (39 DTE) for an additional $0.83 credit per contract. Then Sold the same amount of Qty of puts @ 135 (For $1.12 ea) and now we have a Directional Straddle.
Perdagangan aktif: Rolled to the next cycle, but instead of going inverted I went with a normal Strangle on 135/140 for additional 2.59 credit.
Perdagangan ditutup secara manual: After giving us a hard time, the move down give us a chance to close for a nice profit. It took some time, but at the end of the day it was a winning trade.
Nice trade. Watching (reading) the play by play....... really helpful. Even better to snatch victory from the jaws of defeat by managing the trade properly.
Balas
@dluxe23, Yeah thanks. Sometimes it might see a little too complicated, but for me is worth it even if we end up losing, we lose less than with just leaving the original trade on.
Balas
it sounds complicated for me
Balas
@zerrow, yeah, its easier to just take the loss and move on. No need to complicate things that much.
Balas
zerrow AlexanderGotay
@AlexanderGotay, what is your opinion, which strategy is safer for beginner ?
Balas
@zerrow, Defined risk strategies are very easy since you can just let them run and don't have to think about management like rolling. You know your probabilities before hand and if it was a 60% probability you already know that you will lose 40% of the time and also know your maximum loss (which won't be hit that often). Also defined risk strategies required less capital and have a higher Return on Capital.

A defined risk strategy would be one where you Sell an option and then Buy another option farther away from the money (which would make it cheaper), so for example lets say you are bullish in XYZ, you can sell a Put and then buy a farther away from the money Put and you will get a credit (the difference in price between the options). That strategy is called a Put Credit Spread (names are not important) and the credit received would be your potential profit (If you received $0.50 then you get to keep $50 per contract if the options expire worthless).

You will be able to chose your probabilities depending on how far from the money you sell the Put, and your risk would be the distance between the one that you sell vs the one that you buy (since after that point they cancel each other and you no longer have risk).

If you don't want to pick direction then you can do the same thing to the down side too. So you can have 2 credit spreads one with Calls and the other with Puts (that strategy is called an Iron Condor) and you make money if the price end up between the two options that you sold.

Hope that helps.


Balas
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