ucsgears

SPY - How I take advantage of FED announcements.

AMEX:SPY   SPDR S&P 500 ETF
349 13 7
I have a trade for the FED.
This would be a second lot, Tomorrow morning.
212/210 - 206/204 Iron Condor is a good options here. Or 208/211 - 208/205 Iron Butterfly Trade here. Expiring this week is good. Got to be nimble enough to hedge the losing side. Good Luck,

Just my thoughts, If dont know how to defend a losing side or when to cut it out. Don't trade this.
I forgot to add a note in the chart - The worst cases, SPY will break the Lines drawn. Spy breaking the bottom line will be a disaster, spike down. Waterfall effect. I am not worried about the top, being a trend trader. Preparing for the 5% probability that FED is going to throw out something... unexpected and totally bitter.
Reply
jangseohee ucsgears
QE4
Reply
ucsgears PRO jangseohee
QE4 - will send SPY positive. Like I said, i am not worried about the positive move.
+1 Reply
Watch the channel, It must hold. If anything weird doesn't happen after FED announcement. You still have enough premium on this weeks options.
Reply
Don't even bother trying to make sense of whats happening until 2:30 or 3:00 pm EST.
Reply
There you go, the IV (put side just got crushed).
Reply
And that's how you trade fed announcements, All Contingent orders. Good to relax, as you bring in more cash, with auto triggers. Because, its insane trying to do this manually. Spinning your eye balls, chasing is not the way, Rolling your heads, and missing out is not the way either. REMEMBER TO MANAGE RISK. Best risk management guru is Chris Moody. He could sell this piece of information for a $1000 course. That's exactly what traders need to learn.
Reply
Dead Right, on the TOP channel ............ so far. Learning the market is so important....... Now, the Calls side of the spread would be a loss, Max profit on the put side. if you know how to defend these, by some form. the call sides can be broken even (and made money as well - depending on your defense strategy). While profiting from the puts side. Have the Plan, execute it as per the plan.
Reply
javakittydc ucsgears
So would this trade have been more adjustable with an extra week and therefore the bear call spread could be moved up and perhaps get something if we get a mean reversion?
Reply
ucsgears PRO javakittydc
Yes, from your adjusting perspective. I don't defend the way you mentioned. Reasons

1. The IV crush happens on the current week. If you noticed, the IV went from 35 to 24 on the put side (atleast the ones I sold).
2. RULE - Never adjust the Losing side, Adjust the winning side and create more credit to offset losses. If you had an Iron condor, you could roll the put side, locking profit / creating a new credit. If you did an Iron Butterfly, You could lock the max profit on PCS and then bought some calls or call Diagonals and defend your losing side (risking your PCS profit). These are just a few examples of how I defend options. 90% of the time, I will not adjust a weekly options with the same week. I do not follow the traditional methods, I do things that makes more sense at that moment of time.
3. Important one - This is an event trade, not a technical setup trade. Event trades, you have to be nimble. Tech Setup trades are forgiving and don't have to be that quick.


Other options is to Sell the Options current week and buy the Options (protection) out. After the event, you can roll the Calls to the next week expiry. There are way more stuff you can do.

Yes, I have closed the losing CS side for loss, within the parameter of my risk factor.
Reply
javakittydc ucsgears
So when you go for the same week you dismantle the side of the trade that did not work and let the rest run or do you take profit due to gamma risk?

Reply
ucsgears PRO javakittydc
I do all of the above.
Reply
Lesson from this - Patience Patience Patience Patience !!!
Reply
Ideas Scripts Chart
United States
United Kingdom
India
España
France
Italia
Brasil
Россия
Türkiye
日本
한국
Home Stock Screener Forex Signal Finder Economic Calendar How It Works Chart Features House Rules Moderators For the WEB Widgets Stock Charting Library Priority Support Feature Request Blog & News FAQ Help & Wiki Twitter
Private Messages Chat Ideas Published Followers Following Priority Support Public Profile Profile Settings Account and Billing Sign Out