The objective of most professional traders is to reduce risk on each trade. So how about a risk free trade?
Of course that is not possible, at least not at entry, but only after a few days, with the stock moving up and then down, how is it possible to reach that state of apparent free risk? can one actually lock in that state? or is it possible that it could revert to its original risk at entry?
This is an exercise for those of you with an Optionetic's Platinum subscription, or an account with Think or Swim with access to their Analyze tool.
Please enter the trade as shown, and examine the Implied volatility chart. What steps would you take (if any) to lock in the volatility profits?
1 comment:
Hi Juan,
I saw this case study and had a look at it. Maybe we could sell one more Nov call and put? This would reduce debit, or lock in profit. I thought that if we sold a call only, it would change profile of trade so it no longer looks like a straddle.
I'm sure there are better things you could do, but I haven't seen them yet!
Cheers,
Phil.
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