Papermoney: Exiting the SKF Position

by Ryan Barr on March 12, 2009

in Papermoney,Trade Log

I’ve closed down the papermoney SKF trade this morning.  My personal opinion is that we are getting close to a near term top in the ^GSPC and the risk reward of holding this trade is beginning to work against me.

Today we have the Mark to Market hearings, and of course a range of other possibly market moving news.  Should the XLF drop again (highly probable) I’m concerned about the decay in the values of the greeks for the SKF puts offsetting the potential drop after SKF moves back up.

With implied volatility dropping off so quickly, I’d rather lock in an additional $5,900 in profits for the overall trade, rather than watch it disappear in the next few days/weeks.

So… position closed.  My personal battery of SKF puts have been sold off as well.  I may have been able to bleed more profits out of this position – but now the cash is in my pocket.

Summary

Total investment: $ 13,536.7

Margin Required: $ 0 – Cash Purchase of Options

Total Profit: $ 8,919.5

Return on Investment: 65.8%

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