Friday, January 9, 2015

Friday January 9, 2015

$SPY, $STUDY, AM trade SPY150220P204 in @ $3.70  out @$4.23.

Earlier this week I received an inquiry from a new follower asking about the exit strategy which is employed when I am day trading Options. 

An exit is undertaken when either of two variables is triggered; it is very simplistic and straight forward.  The position is closed if 1) the profit target is reached or 2) there is a reversal in the underlying which is indicated by a directional arrow on the SPY chart. (The directional arrows on the charts are not driven by the same algorithms.  Separate metrics are considered in analyzing the underlying and the contract being traded.)


The spreadsheet below is the method used to establish the profit targets and is driven by the estimated trading range for the day.  





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