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May RUT IC

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.

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