Week #17 - April 27 Options Trades (Updated)
- April 27 Options Trades - 6 SPY Explained.
- What is the RISK? Power ETRADE
- Doing NOTHING is not the best move.
- THETA DECAY
April 27 Options Trades - 6 SPY Explained.
Here are my trades for today.
As of 1:01pm (EST). New Trade was the "4" Visa (part of the 4-5-6).
Why did I do that move? I wanted to add RISK back into the trade.
What is the RISK? Power ETRADE
Since I'm on the ETRADE platform, I will load up Power*Etrade to see some of the options Greek.
After the trade, you can see the June 30 SPY @ 350 put is now at:
- Delta of -.08
- Odds of Expiring ITM at the Expiration: 1.37% (or 98.63% of winning).
- $0.24 credit (For adding the risk) without changing the June 30 Expiration.
- $24 x 6 = $144 minus fees.
Doing NOTHING is not the best move.
Why did I make this options trade? If I had done nothing, will would have had a profitable trade. The odds of winning were over 99%. However, when does it make sense to trade more RISK for more PREMIUM? I like to add risk back into a trade if the risk is still next to nothing. That is something you need to decide for yourself if adding risk back into a trade makes sense.
I started the day with a "June 30 315 short put".
Data on June 30 SPY @ 315 Short Put is:
- Delta of -.03
- Odds of Expiring ITM at 0.01% (or 99.98% of winning)
- Doing nothing will result in a "lower ROI" on this trade.
- Adding some RISK back in will improve the ROI.
THETA DECAY
Since I'm using Iron Condors, I use TIME to my advantage. There is 64 DTE (Days to Expiration) on my option. Each day that passes will add some money in my favor, as long as the SPY stays away from my SHORT LEGS (PUT 350 / CALL 442).
Today SPY is trading between 409-411. The mid-point between my short legs of the Iron Condor is at 396. This means the CALLS are on the TESTED side, and the PUT is safe. I would feel great if the SP500 trades near 3960.
I will let some time decay for now, but I would close this position if the SP500 moves above 4250.