OT Yes, when you reported commission @ $12 for 6 contracts, I forgot that this was a roundtrip, which is why I mentioned IB.
Mind if I do a post-mortem on the trade? I'd give you an A on timing, but only a B- on execution. The trade was profitable and closed out in a mere 6 days, hence the excellent score on timing.
[One thing I have trouble with is getting an idea of when to expect data to be released in biotech trial results. Had you expected the final CART-2 results this early? How does an investor get the relevant dates of future releases? Now that the action moves to ARISE, what is the timetable there?]
As for your execution, it's clear in retrospect that you were far too bullish. In choosing the Dec 35 puts and calls to sell, you implicitly reveal your expectational bias of 35, as that is your maximum profit zone. Of course, that combination was closest to the money at the time you initiated the trade, and thus probably had the highest combined premium, which is probably why you chose it in the first place. Had you chosen Dec 25 puts instead, your position would have been considerably more profitable still. However, all this was calculated in with your trade's generous breakeven point of 35-12.95=22.05. It is to your credit that you selected a trade that could reward you so liberally even if the final result was so wide of the mark.
It is interesting that you seemed to sense the risk midway and attempted to mitigate it by buying the Dec 20 puts. In retrospect, another strategic possibility that comes to mind is to respond by doing further option sales midstream following the direction of the market (which was down in this case). In this way, you diversify your position with a spectrum of strike prices, and hence (hopefully) minimize your risk and maximize your reward.
Have never actually tried this myself, but it seems worthwhile.
Cheers and congrats once again,
Sam |
