Potash – Naked Caller Day Trade
November 20th, 2009, 5:00 pm EST. Posted under Margin Portfolio (MP) by ThetaTrader.
Post Tags: , CLOSED, POT
Day Trade
11/20/2009 - ThetaOptions Margin Portfolio – Potash Naked Caller – Profit $204
This afternoon we noticed the acceleration of Potash to the 115 strike. During that time, we decided to take a chance & attempt to offset the loss on our NOV IRA Diagonal; so we sold (4) 115 Callers @ 0.56 cents as a day trade.
Opening Trade: Nov 09
Sell To Open: (4) Nov 115 Calls –0.56 credit
Closing Trade: Nov 09
Buy To Close: (4) Nov 115 Calls – 0.05 debit
Current Position: None
Profit & Loss Day Chart: Notice the $9000 in margin to make this trade. That’s why we hold large amounts of cash for quick trades.
Profit Calculation & Margin Comments: 0.56 – 0.05 * (4) contracts = $204, but let’s see how that compares against the margin requirement. How much would it be if we made $200 per trading day if we leverage $9000….let’s say there are (52 weeks * 5 trading days – 10 holidays) = 250 trading days. Now multiple that by $200 = $50,000. So our rate of return annually would have been 555% or 2.2% for (3) hours of risk. That’s the risk/reward of trading options on OpEx day. It makes you wonder about the guy that purchased the 115 callers in the morning for 0.05 cents & then hopefully sold them for 50-75 cents. He only has 0.05 cents at risk * the number of contracts bought. We had to risk $9000 just to make $204. I wonder what his annually rate of return was today….Maybe we should call Goldman Sachs and have them calculated their Potash NOV Call side profits for us!