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2019 Trades

eem: 07.16.19 – 07.29.19

ETF | Emerging Markets | Status: Closed

Opening Trade

07.16.19
There is absolutely no
out there, meaning
is pretty much non-existent. Almost all of the
I trade are at 52 week lows in
Due to their low probability of success, I generally reserve
spreads as a last resort – unfortunately, I think we've reached that point. I sold the Aug 42
and bought the Sep 44.5 put for a net debit of $1.49. Due to this particular
selection, I was able to avoid paying very much
– just $0.03. In fact, I actually managed to achieve a slight positive
value so time is currently working in my favor. My maximum profit on this trade is $1.01, and my maximum loss is $1.49.
This trade profits fastest from an increase in IV and a decrease in share value. I could also theoretically profit if the share price stays at current levels, and the the short put decays while the long put retains its time value. By selling the
and buying the
, I leave myself a little opportunity for defense if this
continues higher. I'll be able to
my short put out until September, slowly chipping away at my
Worst case scenario is that this trade costs me about $50 per month over the next 3 months... crappy but an affordable loss. I'd be willing to take this off for 30% of max profit depending on the speed of my return.

Risk Profile:

(Not to scale)
Figure 1

Strategy: Long Put Diagonal

sto 1 aug 16 42 put
bto 1 sep 20 44.5 put
Fill Price: $1.49 debit

Position Analysis

U/L Price: $43.02
IV: 15.3%
IVR: 0
Liquidity: 4/4
Position: Long 42/44.5 Put Diagonal
POP: ≈50%
Cost Basis: $1.49
Risk: Defined
BPR: $149
Max Profit: $1.01
Max Loss: $1.49
Target P/L: $0.30
Break Even(s): $43.01
Extrinsic Value: -3.00
Net Delta: -44.80
Net Theta: 0.420

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2019 Trades
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