I think the definition of r/r (reward to risk) is as follows: max potential reward ($4500 per contract if stock goes to zero)divided by max risk (4500/75=90000%), i.e a very large number. Iow the r/r is superb and is, by your own definition, a low risk trade. The probability of it occuring, of course, is a different thing altogether. I think you are confusing risk with probability. His max risk of $75 is thus quite small. Best daddy's boy
u are waaay too far out of the money; as some1 pointed out already theta pressure will overshadow any delta gains, even if xle trade below 50 u aint gonna make much if anythin'...this is sort of like a lottery ticket for ya in case the stock take a serious tumble in the next week...otherwise kiss 'goodbuy' to u 75bucks.
your right DB I think I used the term R/R incorrectly. I actually never base my trade on R/R using your interpretation but on probability of profit. In options trading I just don't like multiple small loses for a chance of one big win. I know other's say well you are making many small win's but one big loss wipes you out. My reply is money management, position management and trading management makes that one big loss unlikely.
If you are really bearish on XLE,i would not be buying a moderately bearish time spread which will get you long on the way down. If you feel the need to offset the premium on your Dec puts,sell .5 of the Sep options.... I understand what you are trying to do,but why would you trade a calender if you want to be short.I you are ultimately dead right,you will be wrong in your bet.As the XLE gets hammered you are synthetically long the the SEp/DEC call spread and will probably lose half of your intial debit...
you are right...i did imply probability. good catch. i bought some XLE sept 60 puts by the way...didnt do the spread.
I had a limit order in for 1.20 for about 1/2 hour but it didn't get filled, so I changed it to 1.25. Funny, TOS was listing it at 1.00 but I think they might base it on last trades instead of current bid/ask. Sure, if you want to make the effort to follow it in the journal section I would appreciate it. Thanks. BTW, I also have a couple of call calendars going in OIH.
I'm only moderately bearish......actually perhaps even neutral. May be OP is very bearish therefor the WOTM put?
Oh,that explains your position!!!! I was a bit confused as the original poster bought the 77% of spot put.hes clearly VERRRRRY bearish,so a calender wouldnt work too well for him
I'm in the money. I made which thus far was an amazing call, but I choose the wrong options trade - lesson learned.
I just sold the XLE Dec 45 puts, they ain't no way she's goin' to 45 by Dec............. j/k. $1 increments on the options? hmmm... So what is it? This is what I get; XLE SELECT SECTOR SPDR TR SBI INT-ENERGY So it's a spider?