Closing Option Trades In FXE & SLV for Quick $183 Profit

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Option trades: In tonight's video update, I want to go through all of the closing trades that we had today, Tuesday, June 28. There are only two quick trades that we closed out of today. We didn't get a chance to get into any earnings trade, although we had working orders for them, it just didn’t get filled. Overall, the portfolio did well today. What we saw across the board was a lot of dropping implied volatility which is good in some cases.

I mean, it obviously brought in a lot of positions. I think portfolio was up about $600 today overall which is great. But obviously, drop in implied volatility isn’t good for new spots that we’re trying to get into. [Inaudible] for sure, but we welcome it at least for the day. The market was up to almost 2% today, so a nice little rebound, a little bit of a dead cat bounce, you’d more or less expect that.

I’m interested more often to see where it goes after this, after a little bit of relief, rallying maybe a little bit of a short covering rally. And we’ll see where things go from here obviously.

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The first position that we closed out of today was our SLV straddle. This was our June straddle that we had in SLV, not our August straddle. This was at the 16 ½ strikes. Mainly what we saw happen, even though SLV rallied which was against our position, it had a quick drop in implied volatility down to the 39th rank today. That allowed this thing to come in a little bit. It gave us a quick little profit on this couple of three lots that we had in SLV.

Here’s a look here at SLV. You can see the stock rallied today just a little bit. But that drop in implied volatility, just as quick as it was, was enough for us to be able to lock in a nice little profit on SLV. Same thing basically with FXE. We closed out of this trade quickly on a $96 profit on this set of strangles that we had.

This was the 114 calls, the 105 puts that we entered into before the Brexit vote in FXE. And again, just that quick drop it implied volatility that happened today which is a little bit more aggressive than silver and gold. A much deeper drop in implied volatility just allowed this thing to come in really. And that’s where you got that real quick profit.

I mean, all of our profit came today in FXE and SLV. Today with that drop in implied volatility, it just shows you how quickly option pricing moves and how closely related it is to volatility in the market.

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In that regard, we just had two quick closing trades today. Again like I said, we tried to get into some positions that got canceled out here today. You can see here we did try to get into Nike as far as an earnings trade, MON as far as an earnings trade. It looks like Nike is moving a little bit more than expected. MON announces tomorrow.

We tried some different pricing, just didn’t get filled. That’s the result here. It wasn’t the lack of trying. We did try to get into those. I know a lot of people did get into them and that’s good. We didn't unfortunately or maybe, fortunately, depending on where things go.

But again, it is what it is, so we’ll just have to move onto tomorrow. Alright, as always, I hope you guys enjoy these video updates. If you have any comments or questions, please ask them in the comment section right below. And until next time, happy trading!

About The Author

Kirk Du Plessis

Kirk founded Option Alpha in early 2007 and currently serves as the Head Trader. In 2018, Option Alpha hit the Inc. 500 list at #215 as one of the fastest growing private companies in the US. Formerly an Investment Banker in the Mergers and Acquisitions Group for Deutsche Bank in New York and REIT Analyst for BB&T Capital Markets in Washington D.C., he's a Full-time Options Trader and Real Estate Investor. He's been interviewed on dozens of investing websites/podcasts and he's been seen in Barron’s Magazine, SmartMoney, and various other financial publications. Kirk currently lives in Pennsylvania (USA) with his beautiful wife and three children.