121217 Weeklys Trade

here is one reason why it is so difficult to trade Weeklys:
The current IV and skew make a huge difference on our choices.
Here is what I saw at 8:57 am today, Dec 17

RUT Options.

8:57 am;  12/17/2012

8:57 am; 12/17/2012

Look at those call option deltas (last column to the right). We can sell options with a delta of 8, 14 or 21. To me that means there is only one choice. That makes it more difficult to enter an order. Although 14 delta is acceptable for me, it may not be for all traders.

When time is short (as is always the case with Weeklys), we cannot always find a suitable trade.

Dec 18

Trade made.
8:32 am
RUT = 835.73
Deltas 15, 14
Premium 70 cents
11 lots

RUT Dec 815/820P; 850/855C

After the close

The short is less than 3 points OTM and I was away from the computer.
Will probably give up tomorrow morning, but that depends on the cost of making an adjustment – and just how good that adjustment looks..

Dec 19

8:33 am

Lucky the market is not much higher.
I have an appointment that I cannot break and cannot afford to gamble by leaving this risky position unattended.

8:37 am
Bought call spread at $1.70; bought put spread at $0.15. Ouch.

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