AAL Bullish inclined naked puts 20 May expiry (May Track 1)Whats The Plan/Trade/Thought
My original intention was to leverage the volatility from the rate increases to enter VXX. However the BP (Buying Power) requirements were pretty high. Making IT less attractive in risk and reward
The airlines sector are seeing signs or recovery with surges over pre-pandemic level in March. United Airlines (21 April) have forecasted a profit this year.
Looking at the Airline stocks with similar prices movements. I decided to sell puts with AAL as I expected traders to jump into this sector with obvious recovery elements. Especially since Tech companies have been victim number 1 with the rising interest rates.
I also saw markets rising after Powell’s address and I figured the volatility was all done. Boy was I wrong haha
I Feel
I’m entering this post entering the trade. Hence my views now are slightly impacted with what has transpired on Thursday and Friday.
I feel I have made the right decision based on the information I had. However Given that my overall stance was that it was a bearish sideways market. 2/3 of my trades should not be bullish. I am not good at predicting the market, so I must be aware of the probabilities across all my trades and not just each individual trade
In my reflection, how I could have also structured this is, riskier trades should be tied to closer expiry dates
Imagine Yourself Taking The Other Side
Right now post entry, post 5,6 May blood bath. It must feel pretty sweet
Imagine Yourself As A Neutral Observer
In all states (Bullish, Bearish and Neutral). We all agree that the market is ranging and is highly volatile. As such the trade currently is not moving entirely unexpectedly. I think was was unexpected was the Bullish market wide move, followed by two red days
Look For New Information
Current bearish price action is a market wide drop. There could be recovery or it could continue dropping. We have some allowance, but it’s getting tighter
How Do I Feel Now
A little worried about Monday, but I know this trade individually is made of sound decision elements. However as part of an overall monthly trade structure, this new trade weakens it
Trade Specs
Sold 350 Puts @ 0.13 - Strike 15.5
% to Strike is 17.5%
ATR IS 5%
BP used 54k
Max Gain: 4322.5
