#shortstrangles borderline falling knife trade…

#shortstrangles borderline falling knife trade with oil down 4+% today.

STO /CL 41.5/57 Aug 17 (53 DTE) strangles at 0.41. Can only do this in margin account.

I have been doing these but have not been posting because the risk is up there but everyone here knows what they are doing so I will start sharing some of them. I only trade as many contracts as I have cash to cover a sustained move by either going long or short the future same # of contracts as options I sold. Currently $3000-4000 margin for each contract. You can also roll options but because of contract changes cannot always roll directly.

I start managing about 2-3 weeks after putting them on. There was a study a few years back that showed delta 8 options in oil decay almost 50-80% in 30 days from 60 days out. Can usually close around 30-50% profit in 3 weeks. As we all know, oil can move so these are positions you have to watch. I will first roll untested side and if that does not cover the move then add the future for some hard deltas. When you have a big move you can profit from both the option decay and the future movement and get a nice pop in your equity curve.

Cheer, Chris