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11/20/2009 – ThetaOptions IRA Portfolio - POT Diagonal Spread Position Closed : Loss ($250)

What a show Wall Street put on for us today.  Potash started the day around 110.  We had a funny feeling that we should have closed the position during the morning while we were even, but we continued to hold on thinking maybe the MM’s will pin it the stock to 110 at the end of day.  Boy were we wrong, at noon the stock took off again & roared all the way to 115….. Read the rest of this entry »

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!

Next Trade>>

11/17/2009 – ThetaOptions IRA Portfolio - POT Diagonal Spread Position Open

Potash is up 5% today. We’re going to attempt a quick short term play on Potash with a diagonal & only (3) days left to OpEx.  We will place a $1.0 credit closing order GTC. Read the rest of this entry »