Directional play on IWM. With an implied volatility rank of below 10 I decided to buy some options (Yuck!)
I am basically betting that the price will go down below $137 in the next 35 days enough for us to take some profits. The good thing about this trade is that we have basically a 50/50 chance to make money (48% probability), but we have a nice Reward Risk ratio (1.5:1).
The trade:
Buy 138 Put Sell 136 Put
Bought it for 0.80 per contract
Max loss per contract = $80 Max Win per contract = $120
交易進行
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A nice -2.66% day got us into the green, now we improved our probabilities. A little bit of time or more downside move will get us to our target by the end of this week.
交易結束：達到停損點
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After the bull run on IWM we got ourselves in a losing trade. I did add a Put credit spread to reduce my cost basis and my max loss.
The original trade I made 10 contracts so my max loss was $800. The Put credit spread added $250 so my loss for the trade ended up at $550.