Time is on My Side

I try and develop option trades that give me plenty of time to make decisions. Option trades can be much more forgiving of timing and that means not being stopped out unnecessarily - one of the main reasons people lose trading.

My RUT trade is a perfect example. I took some profit yesterday but ended up with a delta/theta ratio that was unfavorable. I saw it and knew it and remarked upon it in yesterday's post. But the good thing was that I could wait until today and see if the market co-operated before I had to make an adjustment.

Well, the market did co-operate and I sold the second butterfly right at the ES support. The total trade made almost 10% on my max Reg-T margin of $102,000 since August 6.

My "problem" now is to get re-invested by finding another trade with a high win rate. Well, no problem really because I just put on a new RUT butterfly for the October expiry. As you can see in the pic, the delta/theta is normal around 1 to 1. If the market moves down to my level, I take profit and if it rallies enough I add another butterfly to the position to make my teepee into a marquee. Having a very specific trading plan for the trade makes it easy to manage in less then 5 minutes a day.

The SPX Iron Condor trade is still cooking. I'm up about 3% at the time of writing this.