I expect EUR fut to drop below 1.46 to around 1.4588, I enter a GTC sell order at 161 on Jan 1.46 put.
Bro, do you not see the folly in your ways? If you are trading options for small gains, you should be BUYING them, not selling them, especially since you are directionally positioned AND more importantly, trading with an underlying that could have extreme moves in a very short time with the current environment. Just advice that will save you a shitpile of money in the future.
What kind of extreme move do you have in mind after EUR has already dropped 500 points from recent high ? another 500 points drop ?
just imagine that greece goes BK over the weekend, germany says they do not help them and EUR collapses to parity in a single day...i.e. another ~5000 points or $62.5k per contract... not saying this will/could happen - just trying to demonstarte PAPAs point...
You are placing a short term bet that has UNLIMITED risk, for a small finite maximum reward, which is upside down R/R, not a career builder. You think the euro will move up, (based on selling a put) so you sell a 146 put and collect 160. A Dubai event happens over the weekend, (which is more likely than not now in this environment, and the euro drops 500), you just had your clock cleaned. Say the opposite happened and you got a 500 point rally, you still woul not have made a full 160 unless you just hold it until expiry, leaving risk still out there. Now again, since you are calling for a move up, if you bot the 146 or 147 or whatever, and paid let's say that same 160, and the above scenario plays out, the drop would keep your loss to less than the 160 you paid with your delta dropping. And on a rally in your favor of 500 pts, you would MAKE a good 300 or so pnts. THIS is what you should trade if your picking directions. Limited loss/UNlimited reward.
That is very good point ! If this past year taught me anything, it is that anything bad that can happen will happen and always happen at the moment when I expected the least. I guess I was too wrapped up in my little trade to see the big picture. I just closed out my position, in at 161, out at 157. Thanks again.
Let's be fair about this... This is a sort of situation that is like, "oh imagine if aliens decided to land on our planet and asked for a big mac." You might say that the likelihood of Greece going under is higher than aliens. Then I ask you why has the bond market not priced this in? The bond market has priced in about 300 basis points. And if the bond market was concerned the differential would be immense to the point that the market would be in a panic. But the market isn't. Sure it might happen, but let's deal with some realistic odds, shall we...
One more thing. The EU has already said that they are sympathetic, but that Greece has to figure this one out itself. I don't think that the Euro is under assault because the EU is staying firm on their demands. http://www.faz.net/s/Rub0E9EEF84AC1...777~ATpl~Ecommon~Scontent.html?rss_googlenews