Bunch of Scratch Trades Before Options Expiration


Hey everyone. This is Kirk, here again at optionalpha.com
where we show you how to make smarter trades. In tonight’s video update, we’re just
going to quickly go over a bunch of the closing trades that we had to round out our portfolio
for the month. As we get into expiration week, as we’ve
done all week, you just have to basically deal with trades that haven’t gone your
way or you adjusted and really didn’t turn around, end up being good trades, I guess
or just ended up being bad trades. Not bad, I guess it just didn’t work out. We’re going to go through a bunch of our
closing trades. It was a weird day to begin with because we
were up about $300 on the day, but we just had a bunch of these trades ended up just
losing and obviously having to take off. A couple of them that we took off, just to
quickly go over them. Our EEM calendar spread which was our put
calendar centered around 34, we sold that back for $11. The whole idea here with this one in particular
and really, everything else that we had for the day was that some of the stuff is just
not stuff we want to keep for the next month. In particular with EEM, because I get a lot
of emails about this and a number of people I went back and forth with on all day on this. But this thing was centered around 34, so
we anticipated EEM either staying low when we got into this or dropping low or continuing
low, but it didn’t. It moved 100% in the opposite direction. But a lot of questions that some people have
was like, “Why buy back these 34 puts in January? Why not let those expire and then hold the
short 34 puts for February?” The reason that you don’t do that is because
this amount right here… This is what I always try to tell people and
coach is that this amount here that’s $13, that’s left to still lose. You could still lose $13 times the five contracts
that you still have in addition to the 140 that you have here. That is not set in stone. We sold those back and if we kept those long
options in February, yes, you’d have some long exposure and yes, maybe the stock goes
down, but you’d still potentially lose another $13 on top of this. You always have to factor in with these calendars. That’s why we always say close it at the
front month because you don’t want to just hold onto these positions on the back month
unless they’re worth pennies, $3, $2, $4 or something like that, something really small
that makes it worth holding and potentially losing a couple of bucks on. The same thing with our call calendar spread
in the Qs. This one had just been a little bit of a scratch
trade. We anticipated that the Qs would go a little
bit higher. They did, but they just didn’t go as high
as we thought they would, nothing really to report there. DIA calendar spread 195 puts, we thought the
market would go a little bit lower. It didn’t go that much lower. It started to head lower, but just didn’t
really get to the point at which we need it to. Again, scratch trade, $30 loss on this, nothing
really here to report. GDX, this one was the one that definitely
moved against us. It’s funny because I knew that this would
eventually come back around. For those of you who have been following along
for a while, last year, we had 100% profitable trades in GDX. We traded it virtually every single month,
multiple positions and didn’t lose on any of our stuff on GDX last year and of course,
probabilities always work out. We’re bound to have some sort of a trade
that worked against us. In this case, it did this month for sure. With GDX in particular though, we did make
some adjustments that helped out. We adjusted a number of times our position,
rolling up a bunch of our puts from I think originally, we started at 16 and then we rolled
up to 18s and 22s. We were rolling this thing up on the put side. Again, that’s all you can do. GDX was a pretty relentless beast all month. It just continued to move higher and higher
and higher, really no significant pullback that we got or no volatility in the account. Now of course, this doesn’t really change
how we traded it. We’re still selling premium. We still have positions even in February now
that we’re adding to and we’ll continue to add to later on this week and into next
week. It doesn’t change anything. It’s just this is how it worked out. We ended up closing out of our short strangles,
the 23 calls, 22 puts down here and then the 21/22 puts up here. I totaled everything into this one column
here for a -$415 loss on the GDX position and that’s after adjustments. Of course, it’s after adjustments. I don’t do and split this thing up into individual
positions. I consider GDX for this purpose, closing everything
out at one time, just removing the entire positions, all adjustments accounted for one
figure here for you guys. The other one that we closed out of is just
our SLV straddle that we had at the 15 strike. We just closed out of our calls that were
in the money. The 15 puts are pretty far out of the money
at this point They’re not even worth anything. I doubt that we could even close them if we
tried to. We’d have to probably pay over their intrinsic
value or their extrinsic value that they have left right now. We ended up closing this back. We’ll assume that those 15 puts expire worthless
and we’ll just take a little bit of a scratch trade on this one, a $34 loss. As always, hopefully you guys enjoy these
videos. I know that sometimes, it’s… Well, it’s not tough for me. I don’t really care about posting losing
trades. But hopefully it helps out just to see that
this is part of the system, part of the game. Sometimes you’re going to have trades that
go against you and usually, you just end up doing a lot of that closing at expiration. That’s when a lot of this stuff actually ends
up coming off the books. I’m excited about next month’s portfolio. We got a good portfolio starting to be built
and we’re continuing to add to that. We’ll do more of that tomorrow now that
we’ve cleaned up everything that we have and then we’ll just keep moving forward,
obviously. As always, if you guys have any comments or
questions, please ask them in the comment section right below. Until next time, happy trading!

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