Option Greeks – How To Trade Options Video 35 part 6



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We have a couple of choices. We can just wait – we have 30 minutes before the market closes. With the Dow Jones Industrial Average up 234 points, that means that there’s a good chance that volatilities will continue to come down.

Let’s go ahead and check our AVP, here. It looks like it’s been up and down all day. It isn’t really making much progress. Other than this morning, we didn’t make much progress. I’m pretty glad that we actually locked in some of the profits this morning, by selling short. We locked in a couple of hundred dollars in profit.

We are just about Delta-neutral. It doesn’t look like they’re going to move Adobe down lower. I could always leg into this by trying to split the bid and ask, but that’s not always possible. What I could do – instead of raising it, I could actually lower it, and see if that has any effect.

Let’s see if that will move the bid/ask at all. It didn’t move it. The only reason I’m not going to increase my bidding price, at this point – the only thing I’m really thinking about is the fact that I have to short 300 shares, in order to get Delta-neutral. The big question is whether I want to short the stock opening up the position, when we’re up 236 points on the Dow.

As I take a look at my list here, Disney is coming out with earnings after the market tomorrow. Let’s take a quick look at Disney’s chart. Volatility over the last 60 days is fairly low. Let’s take a look at the 5-year, and see how it is, in relation to the 5-year. It’s middle to high.

Some people think that Disney’s earnings are going to be disappointing. I have no opinion on that. Let’s take a look at what the current straddle is selling for. The $30 straddle will be right at the money. It’s selling for $2.45. I think I analyzed this before. Disney was right up here, at $3.33.

It has gone up in value. The closer they get to expiration, the more valuable. I got my straddle on Adobe. Now, all I have to do is sell 300 shares.

I’m going in to sell 300 shares of Adobe. I got it. Perfect. I have another Gamma trading opportunity here, with Adobe. I actually ended up getting it a little bit cheaper than I wanted. I had originally put in my order for $2.68. I lowered it to $2.65, and I ended up getting filled on it. It just goes to show that you that you have to stick to your guns and get the price that you want to get, not what the market owners want you to get.

All I have to do is determine – if we’re up a down or two, let’s split that. If I’m up a dollar, I’ll be down 200 Deltas. I currently am short 300 shares of Adobe.

Let’s go over to the chart. We’re at $41.11. If we trade down, we’ll make some money. At least we have our position, here. We should be good to go.

I am just going to put this in the mini-charts. I’ll show you this, just for a second. I keep a bunch of mini-charts over on the side here. That’s where we are now. It’s starting to trade down a little bit.

We’re Delta-neutral, and beautiful here, right in the center. Now we have our position on, and all we have to do is manage it. That’s it for today, guys.

Let’s just check out AVP, before we finish here. Lets just let her see where we are. It’s been up today. It came very close to $38, and then it backed off a bit. If I analyze it, we locked in a profit of about $200. Now that we have two positions on – and we’re going to see if we can add another one tomorrow – now that we have another position on, hopefully we’ll be able to rock and roll here, for the rest of the option cycle.

I’d like to rock and roll. Hopefully, we can add one more Gamma Scalping trade onto it, and then I think we’re going to be good to go. Trade with confidence, and I’ll talk to you tomorrow.

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