Anatomy of a Losing Options Trade

Jun 23, 2022

By The Small Exchange

Overview

Losing options trades are often much more difficult to manage than winning trades; the former can demand strike changes, rolling expirations, and just a lot more attention than simply putting on a trade only to take it off for a profit. Frank dissects his recent trade in Small US Dollar (SFX) options as it went from bad to worse but then retained its profitability.

Frank - an experienced derivatives trader - sold the at-the-money straddle in SFX only to find the market rallying beyond his upside breakeven and onto multi-year highs. Find out how he defended this losing trade and brought it back to profits.

Contents

0:05 Anatomy of a Losing Options Trade

1:10 The Trade

3:00 The Stock Moved Against Us

3:55 Managing the Trade 1

4:45 Managing the Trade 2

6:35 Managing the Trade 3

Get Weekly Commentary on Small Markets!

Sign up to start receiving free analysis on everything from stocks and bonds to commodities and foreign exchange.

Tags:

Latest Articles

What's Next: Inflation vs Recession
Video
The Small Exchange07/19/2022

What's Next: Inflation vs Recession

The Fed primarily controls interest rates, which they move higher in times of inflation and lower in times of recession. But what do they do when there's fear...

Read More →
How Inflation Affects Stocks, Bonds, and Forex
Video
The Small Exchange07/18/2022

How Inflation Affects Stocks, Bonds, and Forex

High inflation is causing some of the largest price extremes, bond and forex markets have seen in decades. Mike and Frank show you how high inflation has...

Read More →
How Does Inflation Affect Markets
Frank Kaberna07/18/2022

How Does Inflation Affect Markets

The highest inflation measure in more than 40 years has left many markets in utter disarray: Nasdaq is at its lowest since 2020, interest rates are their...

Read More →

Prices

Loading...