I made a loss again. But its one that i’m glad i didn’t take any risk. When you are trading options its already pretty high risk. You don’t want too much emotion involved.
I basically laid out the following IC with 42 days to expiry: 930C/920C/760P/750P for a $2.00 profit minus commission.
This correction really tested the system. on 26th July, the delta for the sell put is already overing around 0.17 region. Thats pretty close to the 0.20 to buy back to close. Naturally, i deliberate whether to close. However, i decided to close for a 3.5% loss because firstly, it has broken its channel and secondly the ADX and previous 3 red candlesticks does not look very favorable.
If i don’t close, i might need to buy back at a higher cost. it proved to be a good decision cause it feel by a huge amt in RUT sense that day. had i wait for the next day, I would have taken a bigger loss.
subsequently i open a 870/860 call spread at $0.45 to actually end in profit before commission.
I have burst my margin limits so most likely for September i won’t be putting any spread.
A good lesson with a good ending.