Saturday, October 23, 2010

AEP - bear put calendar - II

I closed my AEP trade accidentally. This is my new trade.

BTO Feb 38 P = 2.7
STO Nov 36 SP = .46
Cost = 2.24 debit

I recorded my Net Position Delta this time. NPD = 0.3 ( good )
I am getting 17% short premium over the long put. Anything above 10% is reasonable.
The trade IV is relatively low now. A rise in IV should be beneficial for the trade.

Primary Exit:

- if the trade hits 20% ROI.

- I may decide to roll down the SP if the trend is really bearish or else I will just close the trade

Secondary Exit :

- If the trend goes bullish, roll up the SP or if very bearish, cut loss.

- If the trend goes very bearish, take out the SP and let the trade run. At some signs of support, add the SP.
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1 comment:

  1. InnovestorNovember 16, 2010 at 1:10 PM

    I decide to close the trade to day.

    BTC Feb 38 P for 2.9
    STC Nov 36 P for .3

    Total profit = 0.36

    or ROI = 16% for 23 days

    I expected to make more money but strangely the long put did not move as much as I expect. I believe this is due to the high dividend given and is built into the put when I bought it.

    ReplyDelete

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About Me

An engineer by training graduated with B.Sc (hons) and MBA from Strathclyde university in Glasgow, Scotland. Started as an engineer in R&D for 3 years with Philips. Then, worked with DuPont for 13 years. Last job was VP, Marketing for Asia Pacific. Left to start a number of companies in various segments which include a large electronic distribution, a VoIP provider, an internet trading portal in Australia,and an executive training consultancy firm. Have listed companies in NYSE, Australia Stock Exchange, Singapore Stock Exchange Main Board. I was on the Board of Directors for 1 company listed in Thailand, 1 in Singapore and 1 in Australia. Was in the senior management of a company listed in NYSE. Still holding major share positions in the VoIP and Executive training companies. Both are private companies.

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