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October 10, 2014 at 10:10 am
#2378
Steven Place
Keymaster
The trade worked out fine, but it wasn’t an absolute stunner.
You can try to hedge using something like a strangle buy but the best bet is going to just close or use a mental stop to avoid any big volatility going into next month.
The main issue as to why this didn’t work as well is because the back month options had a big decline in implied vols. The nov 75 put started at 125% and is currently sitting at 113%, so that’s where a good chunk of the potential gains went.