Index Option Expire: Nov 17 06

Posted on September 11th, 2006 by PokerOption.
Categories: Make a Fortune Option Trading System, Opened Online Option Trades.

Option Trading Mathematics (how to read?)
We entered an Index Option position today.
1175/1200 - 1375/1400
Max option trading reward : $350 if 1200 - 1375 (81.62%)
option trading risk : -$430 if below 1200 (3.38%) or -$955 if above 1375 (15%)
Max option trading risk : -$2150 if below 1200 or above 1400 (8.6%)
Expected Value: $127.89

Option Trading Thoughts
We are taking on some additional risk by entering this position before the Sep option expire. However, with 4 trading days left and a 25 point cushion, this risk is minimal. We also had about $3400 available funds collecting dust. So instead of waiting for the Sep option to expire to establish a Nov position, we decided to get a leg in first. This will allow us to collect an additional week of time premium before we complete the rest of the Nov position next week.

1 comment.