What is the best approach for this trade ?

Discussion in 'Index Futures' started by etrades, Aug 23, 2019.

  1. etrades

    etrades

    Hi guys,

    What is the best approach with this trade below ? The put is now about 21 points buy price as I had sold some call earlier and made about 5 points on it.

    Also, is this assumption accurate that if the put is ITM on Aug 30 then it will be exercised by the brpker and this means the max L on this will be the purchase price of the put - and the Futs position will be closed with this.


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    Last edited: Aug 23, 2019
  2. tommcginnis

    tommcginnis

    First, your maximum loss for the two contracts above is a finish between 2935 and 2936.30.

    Second, I wouldn't do anything without knowing the position greeks, which are absent. That said, your ES delta will be teensy, so there's no rush.

    Third, I would first consider buying a call below 2936 (even 2930), cuz, Jeeez.
     
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  3. etrades

    etrades


    Thank you TomMcGinnis !

    The put price is the max L as per ma mi understanding. i.e. 21 bux as of now. Could you please let me know if that is accurate ? Not clear on why max L is between 2935 and 2936 ?

    Also, does ES have delta also ? The Delta on the put is -0.914

    And Thank you for the advice on the call buy ! did not think of it earlier but now it may be good option. Why do you suggest below 2936 to buy the call for ?
     
    Last edited: Aug 24, 2019
  4. tommcginnis

    tommcginnis

    Did you ever get, "Show your work!" at school on a test?
    I gave you some [possible] answers; you've got to back them up.
     
  5. etrades

    etrades


    Looking to keep capital on this trade on the market rather than new trading ideas or such stuff. need some ideas asap bcoz of the put that is there on this.
     
  6. I think Monday, The SP500 could drop 100 points. Its a Trump dump. I'm short. DO NOT BUY A CALL! Buy another put on an intraday retracement, and close the long futures contract. The market will tank next week. Never trade a futures contract without a stop loss.


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    Last edited: Aug 24, 2019
    etrades likes this.
  7. On Mondays open, the Delta on your put will be 1.0. It will trade as if it was a futures contract.
     
  8. etrades

    etrades


    As per mi understanding, if I close the long ES now it will be 27 pts of L. but if it is ITM on Aug 30 the L is only 21 pts (given I sold a call earlier and made 5 pts). So would it be better hold the ES and make as much of the put premium as possible with other trades around this ES that is open.
     
  9. TommyR

    TommyR

    you have been running the full delta from the strike price so you have been very long. but yes the max loss if you do nothing will be the put buy minus the 5 you made on the call + anything above the stike.
     
    etrades likes this.
  10. Okay, this is what I see. Correct me if I'm wrong. You are long a futures contract that is down by 85 SP points. On Sundays open, it may be down 185 points. You are also long a SP put option where the Delta is at .941. It seems you have a hedged position, as both trades will move in exactly the opposite direction. If you hold both positions open till the end of the week, it looks like you will lose about $1400. You need to stop the increasing losses of the long contract by closing it. If you close it, and the market continues to tank, your option position will increase in value. If SP crashes next week and you close the contract. The put will be extremely profitable, and it may actually turn out you could make a profit.
    You need to stop the losses from the contract and let the option run into more profits.

    Take note, I am looking at it this way due to the fact I think the stock market is in big trouble and will drop big time next week.
     
    #10     Aug 24, 2019
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