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KyleBaran
Feb 6, 2023 9:56 PM

Trade Journal - BBBY, Feb 6 (short IV) [options] 

Bed Bath & Beyond Inc.NASDAQ

Description

Thesis
Did not pay attention to TA at all.
Stock doubled in price today, causing extreme rise in IV pricing on options. Opened a debit calendar spread to take advantage of high IV.

Discovery
Looked at trending tickers for the day.

Correlation
N/A

Entry
+2 7.00C Feb 24 @ 1.48
-1 5.00C Feb 10 @ 1.61
(12.95 fees)

Net: -$148.95

Here is a graphic which shows the expected P&L of this option spread.
optionstrat.com/IxH43VpPdEDH

Comment

Spread was not configured to correctly take advantage of short vega and was more or less a long position with limited downside. Unfortunately, price retraced 30% against me; position remains open as I intend to close it closer to the expiry date.

Of note, the short 5C is 90% profitable - it might be prudent to BTC this leg and collect profits on it, then wait for a reversal to the upside.

Trade closed: stop reached

BTC the short leg at a small profit on that leg; the 2 contracts on the long legs lost money, net P&L is -$120.
Comments
mikemuffin
I’m In a similar situation
KyleBaran
@mikemuffin, I find my biggest thing is to learn to not take trades. It's very easy to trick yourself into doing a "small and quick" trade or something last minute without properly setting it up. Avoiding losses is more important than hitting wins imo
Intraday_Latte
@KyleBaran watcha think it'll do today?
KyleBaran
@Intraday_Latte, Not sure. At best, my trading system is supposed to enter when it crosses the baseline & has confirmation, then ignore the day to day noise until the trend plays out. I don't really pay attention until the stoploss or take profit is hit.

However, I didn't follow any TA for this trade and it's options based, so it's pretty much a lost cause at this point. I'm going to close my short leg and just expose myself to long gamma for Friday a lottery ticket. Not great though, it has to basically hit $6.00+ to break even.
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