So, the power of IV is apparent in the trade from yesterday in MED
I’m currently above my profit target of $250, up $275 as of right now. Just like I discussed, but even better: The short Jun puts are up on a drop in IV even though the stock has basically stayed the same ($30.90 – $30.16). The even better part is that the long Sep $30 puts have gained in price as the Sep IV has increased.
P&L is below: (click any picture to enlarge)
The Thinkorswim P&L graph is below. Notice the live price is right where you want it at the short strike. This trade has little risk now so I just sold half (5 contracts) at $2.98 to lock in $150 profit. Since I have time on my side, I’ll hold this a little longer and see if I can take more advantage of my theta and vega position.
Below is the Live Vol Pro (www.livevol.com) chart of Jun (upper line) and Sep (lower line) IV. Notice the Jun IV has dropped down and the Sep has angled slightly higher, consistent with our returns…
So, our tiny calendar has more than paid for the $100 / month Live Vol subscription fee… Not to sound too “salesy”, but Live Vol Pro is the best thing I’ve found to help find these trades. I couldn’t imaging ‘trading vol’ without it anymore…
As usual, thanks for reading and I’d love some feedback, even just to say you’re here reading. Comments in disagreement with anything I post are welcome and encouraged to start good discussion… Lawrence