Trade Alert (Jan 11) – Sold SPY put option

I sold my 2 SPY put options today. This trade closes out my Dec 18 trade alert (Bought SPY put options). I bought 2 options at $3.20 US / contract or $906.96 CAD. I sold¬†at $4.95 US / contract or $1,391.86 CAD. The trade is my 1st profit for 2016 which I desperately needed! ūüôā Profit on the trade was $484.90 or 53.5%.

I wanted more¬†than $4.95 / contract though… don’t we all want to make more? Greed at it’s best! The simple fact is the market doesn’t care what I want. I had my sell limit set to $6.50 / contract on my $185 Mar 18/2016 puts. The closest I got was probably about $5.25 / contract. I set my limit to $6.50 because I thought with a combination of further downward pressure on SPY and a bump in volatility I’d get enough to sell at $6.50 / contract¬†which would’ve been a + 100% gain on this trade. Clearly that didn’t end up happening.

So…¬†why did I sell? SPY is now riding the -2SD line on the daily chart and today’s move traded¬†below the line, which means we could even see some more downward pressure but I wouldn’t be surprised if we see a huge spike up over the following trading days. Today’s hammer candle is a sign that the buyers didn’t want to close today¬†at the¬†daily lows. I simply didn’t want to be caught in the middle.

Sold SPY put option

So what next? We’ll have to see how SPY trades throughout the week. If it¬†pushes lower, I think we might test even $185. I’m going to sit on the sidelines and watch. If it dips a bit lower, I’ll pick up some call options to swing trade on the way up.