Quick Profit Trading YHOO Options

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Profit trading: In this video, I just want to quickly go over our closing trade in one of our positions in YHOO that we closed out today, and that was our December strangle, the 33, 32 strangle, very tight strangle.

It was almost acting like a straddle because we did this thing when implied volatility was high, but we were able to close it out today because implied volatility had a nice drop in Yahoo and the stock price also went down so, we closed it out by buying it back at a $1.33 debit. 

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That gave us about $137 on this trade as a nice quick profit on this position. Now again, the reason that this thing worked out so well is because implied volatility quickly dropped today and so, we saw a nice drop in implied volatility and the stock kind of came back into a little bit of a range that we were expecting.

Remember, our position was down here, around 33, 32 so, anything kind of in this 32, 33 zone is where we ideally wanted the stock to land.

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We closed out the December position. We still have the January position that we added just earlier this week. If you remember, obviously, you have that new position, and we're going to carry that January position until it meets our profit targets, or if we need to adjust it, if YHOO moves against us, we'll obviously do that and let you guys know.

Quick trade in Yahoo this week and nice little profit. 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. 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 two daughters.