[Options] Wow, that was fast.

Sean McLaughlin
October 7, 2021

The short puts we entered on $SPY on Monday hit our profit target today and we are out. Profit target hit in under 4 trading days. We’ll take it!

Meanwhile, the $FCX Bullish Risk Reversal we entered yesterday has quickly moved in our direction.

I’m not one to look a gift horse in the mouth, so I’m going to take this opportunity to remove the risk from the trade.

For details on the trade, you can review it here. In short, we sold naked short puts to pay for the cost of our long calls. Thanks to today’s move, we’re able to sell some of our calls to pay for closing our entire naked short puts position. And we did that today… 

For me, I did a 3-lot trade. Meaning I was short 3 puts and long 3 calls. This morning, I was able to sell one of the calls for $1.37. This credit more than covered the cost of closing all three puts for 41 cents each. Adding the small net credit received on this adjustment to the small net credit we received when we put the entire trade on, and it all adds up to me now holding two remaining calls -- FOR FREE! Due to the small net credit, I’m technically being PAID to hold this position!

Are you kidding me? I’ll take this opportunity every time.

Going forward, if FCX trades up to $39 as originally discussed, I’ll still sell half of my remaining calls position to lock in some profits while still holding on to a small piece for a hail mary!

If you missed yesterday's twitter live stream where JC and I talked about this trade, you can catch it here.

If you have any questions on this trade, please send them here.

ASO Subscribers can catch our next options Jam Session this Friday at 2pm ET here.

~ @chicagosean

P.S. We do trades like this regularly. If you'd like to leverage Best-in-Class technical analysis into smarter directional options trades, try out All Star Options Risk Free!

 

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