Taking a Loss Today:
Closing purchase for loss on the AUG19 1225 strike Gold PUT today. Loss = $220 (not incl commissions.)
I also closed the AUG19 $1500-strike CALL for 1.60 ($160) .
I exited the AUG19 $1225-strike Gold PUT today as it doubled to 4.20 and over. I put in a GTC for 4.30 and was filled at midday. I had sold it for 2.10 ($210) and got out at 4.30 ($430) = a loss of –$220
I exited the AUG19 1500-strike Gold CALL today for 1.60. I had sold it for 2.00 ($200) so I had a $40 profit.
So my NET LOSS of this strangle was $220 minus $40 = NET (total) -$180
Comment: I decided to go ahead and exit both sides in order to keep the total loss to a minimum.
My plan is to re-group on another Gold short strangle next week. TBD To Be Determined.
The market sold off Gold sharply today due to the $US Dollar strength. The world economic conditions and the sudden direction change is what the sell-off is attributed to.
Just so you know: Another less obvious advantage of liquidating both sides of this trade today is that the IV% (implied volatility) is likely to increase significantly. As IV% increases it would work against (short options) the short strangle. Thus, in theory, it is possible to get a favorable price move and still loss more money.
If you hold this trade or a similar trade, I don’t see any reason to go to any ‘panic mode’ to liquidate it – as the gains on one side of a short strangle, somewhat help offset losses in the other side. The important point here is just to keep losses relatively small and accept that some losses are just a part of doing business. Not doing so can be fatal to your account.
Losses are an important, if undesirable, part of trading. They happen and a trader has to not let herself/himself get into a negative position where the only strategy left is “hope.” I don’t like taking the loss and never will, but it is better than allowing myself to get into an even less-desirable situation. Often as not, these trades can and do turnaround – but it gets more risky to hold such a trade when losses can compound. As the underlying’s prices get closer to the strike the rate of change of the delta (the ‘gamma’) is higher, which means losses can compound faster. A few bad trades can wipe out weeks of gain, so losses must be capped. If you have not read the article, please see: Psychology of Trading at this link: https://sellingcommodityoptions.com/blog/psychology/
In The Art of War by Sun Tzu, it is written:
He will win who knows when to fight and when not to fight. Do not fight battles you cannot win.
I have to travel this weekend on personal family business, so it is possible the next Trade Commentary will be on Tuesday and NOT Monday next week.
BTW: For a one-page rundown of the major trading hours for each market, here is an article that lists them for you:
https://sellingcommodityoptions.com/blog/trading-hours-futures-and-options/ If you are new to commodity trading, you might want to copy & print these out to keep them handy.
Summary of My Positions:
Short strangle:
Short SEP19 Crude Oil 80-strike CALL for 0.17
Short SEP19 Crude Oil 35-strike PUT for 0.09 (total of 0.26 = $260)
This new Trade Origination button will take you back in time – to the post where the trade was originally placed, so you can review the chart, fundamentals, and the details of this trade’s selection. This way you get much more than just the position listing. – DAS
Short Strangle
Short the JUL19 Crude Oil 75-strike CALL for 0.11 ($110)
Short the JUL19 Crude Oil 45-strike PUT for 0.18 ($180)
(total 0.29 =$290 )
Short Corn DEC19 540-strike CALL for 2.875 ($143.75)
Short the DEC19 Corn 330 for 2.0 cents ($100.)
For simple illustrations, I post all my trades as quantity of one option, although I trade more of them usually.
Thank you and good trading. Have a nice weekend, or worry what gold will do next week. Your choice! I’ve made mine. – Don
Don A. Singletary
The commentary and examples are for teaching purposes only and are not intended to be a trading or trade advisory service. Any investments, trades, and/or speculations made in light of the ideas, opinions, and/or forecasts, expressed or implied herein on the web site and/or newsletter, are committed at your own risk, financial or otherwise. Trading with leverage could lead to greater loss than your initial deposit. Trade at your own risk. Investors and traders are responsible for their own investment/trading decisions including entries, exits, position, sizing and use of stops or lack thereof. This is not a trade advisory service and is for educational purposes only. The content on the pages here is believed to be reliable - but we cannot guarantee it.
Taking a Loss Today:
Closing purchase for loss on the AUG19 1225 strike Gold PUT today. Loss = $220 (not incl commissions.)
I also closed the AUG19 $1500-strike CALL for 1.60 ($160) .
I exited the AUG19 $1225-strike Gold PUT today as it doubled to 4.20 and over. I put in a GTC for 4.30 and was filled at midday. I had sold it for 2.10 ($210) and got out at 4.30 ($430) = a loss of –$220
I exited the AUG19 1500-strike Gold CALL today for 1.60. I had sold it for 2.00 ($200) so I had a $40 profit.
So my NET LOSS of this strangle was $220 minus $40 = NET (total) -$180
Comment: I decided to go ahead and exit both sides in order to keep the total loss to a minimum.
My plan is to re-group on another Gold short strangle next week. TBD To Be Determined.
The market sold off Gold sharply today due to the $US Dollar strength. The world economic conditions and the sudden direction change is what the sell-off is attributed to.
Just so you know: Another less obvious advantage of liquidating both sides of this trade today is that the IV% (implied volatility) is likely to increase significantly. As IV% increases it would work against (short options) the short strangle. Thus, in theory, it is possible to get a favorable price move and still loss more money.
If you hold this trade or a similar trade, I don’t see any reason to go to any ‘panic mode’ to liquidate it – as the gains on one side of a short strangle, somewhat help offset losses in the other side. The important point here is just to keep losses relatively small and accept that some losses are just a part of doing business. Not doing so can be fatal to your account.
Losses are an important, if undesirable, part of trading. They happen and a trader has to not let herself/himself get into a negative position where the only strategy left is “hope.” I don’t like taking the loss and never will, but it is better than allowing myself to get into an even less-desirable situation. Often as not, these trades can and do turnaround – but it gets more risky to hold such a trade when losses can compound. As the underlying’s prices get closer to the strike the rate of change of the delta (the ‘gamma’) is higher, which means losses can compound faster. A few bad trades can wipe out weeks of gain, so losses must be capped. If you have not read the article, please see: Psychology of Trading at this link: https://sellingcommodityoptions.com/blog/psychology/
In The Art of War by Sun Tzu, it is written:
I have to travel this weekend on personal family business, so it is possible the next Trade Commentary will be on Tuesday and NOT Monday next week.
BTW: For a one-page rundown of the major trading hours for each market, here is an article that lists them for you:
https://sellingcommodityoptions.com/blog/trading-hours-futures-and-options/ If you are new to commodity trading, you might want to copy & print these out to keep them handy.
Summary of My Positions:
Short strangle:
Short SEP19 Crude Oil 80-strike CALL for 0.17
Short SEP19 Crude Oil 35-strike PUT for 0.09 (total of 0.26 = $260)
This new Trade Origination button will take you back in time – to the post where the trade was originally placed, so you can review the chart, fundamentals, and the details of this trade’s selection. This way you get much more than just the position listing. – DAS
Short Strangle
Short the JUL19 Crude Oil 75-strike CALL for 0.11 ($110)
Short the JUL19 Crude Oil 45-strike PUT for 0.18 ($180)
(total 0.29 =$290 )
Short Corn DEC19 540-strike CALL for 2.875 ($143.75)
Short the DEC19 Corn 330 for 2.0 cents ($100.)
For simple illustrations, I post all my trades as quantity of one option, although I trade more of them usually.
Thank you and good trading. Have a nice weekend, or worry what gold will do next week. Your choice! I’ve made mine. – Don
Don A. Singletary
The commentary and examples are for teaching purposes only and are not intended to be a trading or trade advisory service. Any investments, trades, and/or speculations made in light of the ideas, opinions, and/or forecasts, expressed or implied herein on the web site and/or newsletter, are committed at your own risk, financial or otherwise. Trading with leverage could lead to greater loss than your initial deposit. Trade at your own risk. Investors and traders are responsible for their own investment/trading decisions including entries, exits, position, sizing and use of stops or lack thereof. This is not a trade advisory service and is for educational purposes only. The content on the pages here is believed to be reliable - but we cannot guarantee it.