Glimpse of Genius Trade for January 2014 – FDX
So far the Glimpse of Genius trades are doing very well.
Last month’s trade expired worthless for the full profit.
This one is using the same strategy as last month – the credit spread.
The trade is on FDX which is Fedex.
There are 30 days to expiration.
Sell Feb 135 Puts
Buy Feb 130 Puts for a credit of .44
If you do one contract the margin will be $456. The potential gain will be $44 or 9.6%
This trade has a 82.4% probability of profit.
Basically we want FDX to be trading above 135 at expiration. If that happens the trade wins. Of course we could always exit the trade earlier. We do not have to wait until expiration, but you will not get the max profit if you exit early.
What is Glimpse of Genius?
Simple. I want to expose more people to option selling. If you get a Glimpse of Genius and like what you see, then I suspect that you will sign up for Option Genius membership to get even more trades. We do 3-5 trades a month as part of Option Genius.
DISCLAIMER: Keep in mind that I am not recommending these trade to you. I am just providing these for education and entertainment purposes only. I am not responsible if these trades lose money, because they could.
My advice is to papertrade them and see how they work.
I am also setting up a separate email list for those that want to be notified of any adjustments. Adjustments will not be emailed to our main list or posted on the blog. So if you want to be sure you get all the trades, adjustments, and exits please sign up for that email list by clicking here.
Also, be sure check out our previous blog posts for best options advisory service and awesome tips on options strategies.
Like the info!
If the trade turns against you how much loss (percentage or dollar amount)are you willing to take and how would you limit them? (With a possible profit of $44 and potential loss of $456 even if you are right 90% of the time the losses will be greater than the gains.)
There are many things you can do if the trade goes against you. They depend on what you think will continue to happen.
You can turn this trade into a non-directional one.
You can roll the trade down in the same month.
You can roll the trade into a future month.
You can roll the trade down and into the future.
Or the easiest is just to exit when you are down a certain % like 20%.
Which one did you do with this trade? and when?
How would I figure out a 20% lost with this trade? I just want to understand the math formula for future trades.Thanks