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2019 Trades

ewy: 12.03.19 – 12.13.19

ETF | South Korean Equities | Status: Closed

Closing Trade

View original trade
12.13.19
This is by far my most frustrating trade of the year. After reluctantly
my
to defend yesterday's huge rally, I found out today that EWY is going
on Monday. I'll explain what that means:
On a product's ex-dividend date, anyone who is
will be required to pay the dividend amount to the
side. I am not currently short shares, however, I do have a
Whenever you have a short ITM call with less
than the amount of the
you are at risk of
because the long side will want to use their call to buy shares from you. This way they can get paid the dividend. If the call has more extrinsic value than the dividend amount, however, the risk of assignment is very low because the long side would lose the difference if they
their option. Now back to my particular situation...
EWY has skyrocketed since I put it on, taking it from slightly profitable to blowing well past my initial
and then my adjusted B/E in a matter of a couple days. This left my
deep
with very little
(around $0.20 or so). I can tell by the difference in extrinsic value of the calls and puts that the dividend is likely to be around $0.60 to $0.70 – pretty massive for a product this size! Since my call has less extrinsic than the amount of the dividend, I am unfortunately at risk of assignment. Come Monday, I would likely find 100 short shares in my portfolio, and I would be required to pay the $60-$70 – no, thank you!
This trade totally screwed me in every way possible and all at once! The best thing to do now is cut my losses and move on. It sucks to lock in loss, but $1.12 is not that much and, with this dividend complication, the position is simply not worth the effort and risk to defend. The
is low, my
is low, EWY is not very
and, and, and... I'm going to call this a botched trade and be thankful I kept my risk super small. Staying small is truly the most important defensive tactic we have. This would have felt much worse if it were a big loss! My portfolio stands strong even though my ego took a smack... Honestly, it was probably deserved XX

Risk Profile:

Figure 3

Strategy: Close Position

btc 1 jan 17 59 put
btc 1 jan 17 59 call
Fill Price: $3.18 credit

Position Analysis

U/L Price: $61.19
IV: 19.9%
IVR: 20.7
Liquidity: 3/4
Final P/L: $1.12 Loss

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2019 Trades
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