Taking Advantage of Cheap Premium (hopefully it doesn’t get cheaper)

TradingPub Admin | January 9, 2013

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We are going to keep this short and sweet because the 17 minute and 55 second video pretty much explains it all.  We thought we would share a little free trading education with our patrons who are always up for learning something new.  We hope that it will be helpful for you to see a style of trading that focuses on future and futures options on a swing basis.  As of the time of this post, one of the positions is in the green and one is in the red... who knows what will happen next but this is how we positioned.

Here are a few questions you might ask yourself (we also went ahead and answered them so you wouldn't have to think about it too hard).

1.) Does the fact that we bought puts mean we think the market is going to crash?    Answer:  No

2.) Does the fact that we are sharing this trade mean that you should take it immediately?  Answer: No

3.)  Can we lose money on this trade?  Answer:  Of Course

4.)  Do you we talk about how we will manage risk?  Answer:  Yes

5.)  Do we think it will be educational and hopefully shed some insight into some strategies you might not have thought about?  Answer:  We hope so!

You can access the video below:


***UPDATE TO THE VIDEO (JAN 10)  As mentioned in the video, our breakeven price at expiration for the Aussie trade was 105.10.  That price was hit overnight which took us out of the short Futures contract at a loss of 1.00 on the Aussie which equates to $1,000 (it is $10/tick).  The short 104.50 put that we sold at 1.05 is currently trading at .54 (Gain of .51 or $510) which leaves the overall trade as a current loss of approximately $490.  We are exiting that trade for now and will revisit if it starts to break back below 105.00.  We will continue to hold the 104/103 spread.  

If you like learning about these types of trading strategies, be sure to sign up for our next free trading event - Register Here 


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Risk Disclaimer: Past performance is not indicative of future results. Futures trading involves substantial financial risk. Views of guest commentators do not represent those of Article intended for educational purposes only and not meant in anyway as a solicitation to buy or sell certain securities. Please consult your personal financial adviser before using this information for your own trading purposes.

Grammar Disclaimer:  Please, ignore, any misplaced commas, or spelling, errorrs.  We are traders and not English majors :)