Hi Antagonist members,
Here are the details of the QQQ trades that I posted in our member chat last week (closing trade 1; closing trade 2).
The trade started to go against us, so I closed half our position to cut our losses at 24%. Over the next 2 days, however, things swung back in our favor. That let me close the rest of our position for a 50% gain. Overall, we booked a profit of 13% in 25 days. And that was while stocks were falling!
You can read the opening trade alert here, and the closing details are below:
Bear Put Spread Option: NASDAQ-100 ETF (QQQ)
Closing details for the 1st half of our position
Bear put spread option (this means that we wanted the underlying ETF to drop).
ETF price when I opened the trade: $359.66.
ETF price when I closed the trade: $363.49.
Premium paid to open trade: $50.
Proceeds collected when closing trade: $38.
Result: 24% loss.
Closing details for the 2nd half of our position
ETF price when I opened the trade: $359.66.
ETF price when I closed the trade: $354.88.
Premium paid to open trade: $50.
Proceeds collected when closing trade: $75.
Result: 50% profit.
Combined results
Total premium paid to open trade: $100.
Total proceeds collected when closing trade: $113.
Overall result: 13% profit in 25 days.
Trade review
In hindsight, it’s easy to say that I shouldn’t have closed the first half of our position for a loss. Holding it for just 2 more days would’ve netted a 50% total profit instead of 13%.
There was no way to know that at the time, however.
If you’re going to have long-term success trading options, you MUST cut your losses. Yes, this will result in missing out on some winners. More often, however, you will limit the amount you lose.
That’s how I managed this trade. I wanted to limit our losses while still giving us the chance to profit. That’s exactly how this trade played out.
While a 13% gain isn’t earth-shattering, it took only 25 days to net those results. That’s a solid return! And remember, stocks were falling during this time!
Congrats on another winner!
Jason Milton
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