What better way to show my trading strategy than to illustrate some actual examples on volatility spike and contraction. If you follow my trades, I was slightly delta short and today was a good day when volatility spiked in the front month of the VXX, causing my limit order to fill in the VXX. I placed this trade a couple of weeks ago as a way to hedge my long positions. On the contraction illustration, I entered a trade in RAD (Rite Aide Corp) over a week ago when volatility reached 100%. Note that this is not a liquid stock and I typically shy away from it. Furthermore, I usually enter my trade on a third day of a large gap down as can be seen in the chart below. Then wait for volatility to collapse, which is did today dropping from 100% to 40%. Even though the underlying moved against me by a whopping 18%, I'm still making money and it was a profitability trade.
1 Comment
|
Welcome!High probability option trading with Mr. 848Days! Archives
March 2017
|