QQQ Time Decay Spread Look Back Trade

QQQ – 07/07/2016

I decided to attempt more of a scalp strategy with one of my standard time decay strategies. I have really not had much luck with scalping the market using these strategies as this trade will continue to show.

On 7/7 with QQQ trading at $108.39 I purchased the July week 3 $112 Puts for $3.65 and sold the July week 2 $110.00 Puts for $1.65. I paid $2 for the spread which was not ideal, by paying that much I would really need QQQ to finish pretty close to $110 the next day to make money, below that I was at a break even on the trade. On 7/8 the market had not moved like I wanted so I repurchased the $110 expiring that day and decided to sell the July week 3 $113 Put for $2.71 which made this a credit spread because the market had moved up.

This had become kind of a weird trade now so on 7/13 with QQQ at $111.87 I decided to just close the trade for as close to break even as I could. I could have rolled the entire position to the next week and perhaps made a little as long as QQQ stayed between $110.00 an $112.30 but decided it was not worth the risk.

I never like to lose money, but I entered this trade for to much money when I started. I paid $2.00 ($3.65 – $1.65) when I should have paid between $1.60 and $1.80 which is why I ultimately lost money. I will sometimes do this if there is enough volatility in the prices but it is risky on these types of trades.

Date

Sym

Action

Exp

Strike

Price

Cont

Type

Cost

Balance

07/07/16

QQQ

BTO

7WK3

112

-$3.65

5

Put

-$1,825.00

-$1,825.00

07/07/16

QQQ

STO

7WK2

110

$1.65

5

Put

$825.00

-$1,000.00

07/08/16

QQQ

BTC

7WK2

110

-$0.02

5

Put

-$10.00

-$1,010.00

07/08/16

QQQ

STO

7WK3

113

$2.71

5

Put

$1,355.00

$345.00

07/13/16

QQQ

STC

7WK3

112

$0.41

5

Put

$205.00

$550.00

07/13/16

QQQ

BTC

7WK3

1113

-$1.18

5

Put

-$590.00

-$40.00

Share and Enjoy !

0Shares
0 0

Leave a Reply

Your email address will not be published. Required fields are marked *