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

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