After doing a few IC (paper and real money), I sort of understand what it means by balancing high probability profit with the prospect of buying back losing propositions at a loss.
Sold RUT IC 880/870/730/720 for $1
Max loss is 1800 for 2 contracts
Expected gains: 10%
short call 870 at 0.07 delta (68% prob)
short put 730 at 0.10 delta (92% prob)
looking at the TOS system after my order is filled, i realise that i have misinterpret the system. if u have 2 same contracts, at the MONITOR tab, they will aggregate ur DELTA. so the short call 870 will show a delta of 0.14! That is a very dangerous misinterpretation. That is why i’m not risking any more money then what i can lose.
This sys is not as easy as it looks.
Past lessons:
- Don’t force yourself to place an IC for the month if you can’t get scrape at least 50 cents on a single spread
- Don’t be greedy and roll up the safe side as much as you can. Things can turn around very very easily.
- Be clear on how much you want to make. Once you reach it, its time to buy back as cheap as you can to achieve it. Again dun be greedy.
I hope the adjustments this month won’t kill me.
Kyith is the Owner and Sole Writer behind Investment Moats. Readers tune in to Investment Moats to learn and build stronger, firmer wealth foundations, how to have a Passive investment strategy, know more about investing in REITs and the nuts and bolts of Active Investing.
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Kyith worked as an IT operations engineer from 2004 to 2019. Currently, he works as a Senior Solutions Specialist in Fee-only Wealth Advisory firm Providend. All opinions on Investment Moats are his own and does not represent the views of Providend.
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