Option Investor


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YET?Good Morning Team,

It's 9:35 Thursday morning. I've received emails and phone calls about our short October 1365/1380 SPX position. With the SPX at about 1350, some folks are getting worried.

At least it has your attention. Now you have to decide if/when you want to GTFO of this position. As I've stated dozens of times before, you exit point is a very individual decision.

If you were to get out now, it would cost about $3.60. Now, subtract the $1.40 you took in as premium and you're left with a deficit of about $2.20. That's not bad -- if you want to get out.

Others will hang on for a bit to see if the market is going to pull back. There is still about a 15 point cushion until it reaches our short 1365 strike price. If the SPX continues up, the amount of the loss will increase. Remember, a loss is just a cost of doing business. It's not a personal failure.

What's your risk tolerance? I guess we're going to find out. Either approach is acceptable -- as long as you recognize what the risks are and act accordingly.

I'm going to hold on a little while longer. But I may have a higher risk tolerance than you.

Good luck and trade smart!!


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