Last night was a close shave as usual. The market was indecisive, and that's a clear indication that there is a selling opportunity, but a risky one. That's because you never know where the market is heading towards, it can be a roller-coaster up and down price fluctuation the entire night without any conclusive result.
I nearly eye-balled the market again, but decided that the buffer was safe enough and went to sleep, albeit with an uneasy gut feel. I knew my trade was safe, but I can never be truly safe. Just had to take a risk.
The trade summary again:
Trade: Sell SPY NovWk5 PS 140/141 $0.05
Entered: Friday 30 Nov (US time)
Expired: Friday 30 Nov (US time)
Contracts size: 5
ROI: 2.95%
Status: Options Expired Worthless!
Analysis:
Looking at the chart for last night, my prediction that the two moving averages would finally meet is now true. The tenkan sen and kijun sen has met! When the tenkan sen crosses the kijen sen from below, it is a very bullish signal.
Looking at the candlestick for yesterday, it looks undecided, and that just means that the market is going to shoot up above the clouds. The question here is, would there be enough buying power in the market to allow that to happen? It's anyone's guess, but from here, it looks good!
My decision to enter the market on Friday is both a safe and risky one. It is safe because Friday is the expiry day when market closes, so technically due to time decay, there is very little risk if I were to buy anything after the market has "spoken" in the early hours of trading.
However, since there was no definite answer last night, it was also risky to sell anything because the market could possibly expire against your favor, in which case, you would be caught with your pants down. Furthermore, this was compounded with the fact that there is very little premium generally all around weekly options on the day of expiry, that you simply just have to take a risk.
Thank goodness, there was one opportunity that was relatively safe. Price was $142+/- thereabouts, and there was a spread $140/$141 that offers a $0.05 premium. Of course I know later that it actually offered $0.08 premium because the market started dropping (de ja vu). But if I wasn't in, I would probably not be selling anything thereafter, so it was an overall good decision to enter when I did.
Greed, I realise will make you linger and want the higher premium, but in reality, your soundness of mind would prevent you from entering into a trade with a higher premium especially when you consider that the buffer is so tiny. The market went to a low of $141.66 (presumably that this was when the market offered a $0.08 premium) under these circumstances, would anyone in their right minds sell a trade? Not likely.
Anyway, I just got up, and the options has successfully expired worthless! Another 2.95% ROI on the road to recovery! Next week is going to be exciting!
That's all for now!
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