Post 4: 80% Trade by May 2023
If you're just reading this for the first time. Please search "80%" under my ideas for the previous 3 posts.
I've had some DM's about how does the trade make money. I apologize I neglected that.
Hypothetically if I were to sell the May 2023 week 3 3350 puts. Those puts are now bidding 183.00x187.25 WITH THE SPX FUTURES AT 3600. If I was selling I would put in a limit at $185. That means if I filled on my 1 put contract sell order I would receive immediately in my account the premium of $9,247.18 ($185/2*100 minus commission) . Along with my $12,000 to cover the trade my cash balance would immediately be $21,247.18. When you're a seller you receive all the trade profit immediately.
The goal is to keep it.
You keep the premium of $9247.18 if the SPX closes above 3350 in May 2023. I would be left with approximately $3,500 in buying power. That sits there to account for trade drawdown if the SPX continues to decline. The premise is the sell would be close in proximity to the bottom of our wave 5. Therefore any further downside would be minimal. Additionally we want this put to be out the money....meaning way below where the market is finding it's bottom. Therefore we are afforded some room to be wrong.
$9,247.18/$12,000 = 77% profit. The corresponding call that would eventually be sold as a hedge would be very far out of the money and would probably not be executed until the SPX is approaching the ATH. That should account for the additional % to get us well over 80% on this trade (Probably more like 85%.) Additionally in our wave 5 the put will be worth a lot more because the SPX will closer to the strike price. It conceivably could get to $225 for that same put option by the time I go to sell. That's $11,250 for the $12,000 used to cover the trade. That's 93.75%.
My plan is to sell 4 contracts for premium of $36,988.32 to do that trade I'll keep $50,000 just sitting in the account to cover the trade and have about $12,000 in buying power cushion. This trade will not be sell it and forget it....but that will be part of our ongoing discussion regarding the 80% trade.
This trade is something I have been planning for some time. If a novice was doing this trade and choose the wrong strike price, or overleveraged their account, this is the type of trade that could cause massive losses in ones account. The analysis has to be spot on prior to doing a trade like this.
Now you have all the details regarding this trade. I WILL NOT BE POSTING ABOUT THIS TRADE AGAIN UNTIL TRADE DAY.
To see the last time I did a trade like this click here.
Best to all,
Chris
I've had some DM's about how does the trade make money. I apologize I neglected that.
Hypothetically if I were to sell the May 2023 week 3 3350 puts. Those puts are now bidding 183.00x187.25 WITH THE SPX FUTURES AT 3600. If I was selling I would put in a limit at $185. That means if I filled on my 1 put contract sell order I would receive immediately in my account the premium of $9,247.18 ($185/2*100 minus commission) . Along with my $12,000 to cover the trade my cash balance would immediately be $21,247.18. When you're a seller you receive all the trade profit immediately.
The goal is to keep it.
You keep the premium of $9247.18 if the SPX closes above 3350 in May 2023. I would be left with approximately $3,500 in buying power. That sits there to account for trade drawdown if the SPX continues to decline. The premise is the sell would be close in proximity to the bottom of our wave 5. Therefore any further downside would be minimal. Additionally we want this put to be out the money....meaning way below where the market is finding it's bottom. Therefore we are afforded some room to be wrong.
$9,247.18/$12,000 = 77% profit. The corresponding call that would eventually be sold as a hedge would be very far out of the money and would probably not be executed until the SPX is approaching the ATH. That should account for the additional % to get us well over 80% on this trade (Probably more like 85%.) Additionally in our wave 5 the put will be worth a lot more because the SPX will closer to the strike price. It conceivably could get to $225 for that same put option by the time I go to sell. That's $11,250 for the $12,000 used to cover the trade. That's 93.75%.
My plan is to sell 4 contracts for premium of $36,988.32 to do that trade I'll keep $50,000 just sitting in the account to cover the trade and have about $12,000 in buying power cushion. This trade will not be sell it and forget it....but that will be part of our ongoing discussion regarding the 80% trade.
This trade is something I have been planning for some time. If a novice was doing this trade and choose the wrong strike price, or overleveraged their account, this is the type of trade that could cause massive losses in ones account. The analysis has to be spot on prior to doing a trade like this.
Now you have all the details regarding this trade. I WILL NOT BE POSTING ABOUT THIS TRADE AGAIN UNTIL TRADE DAY.
To see the last time I did a trade like this click here.
Best to all,
Chris
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