This segment examines two recent trades, one in COST and the other in UVXY, that both went wrong and how by following our philosophy of trading both losers were turned into winners. Unless you've never had a trade go wrong and never will you need to watch this segment.
The segment begins with the COST trade, an August short iron condor placed in “Bob’s” IRA account on 7/9/15. It was a classic tastylive position which received a credit of ⅓ of the difference between the strikes (on one side). The details of where COST was in price and IVR were provided. The individual strikes and prices, plus the combined credit was noted.
By August 12th the trade was not where we wanted it to be. Expiration was approaching and we had to act. Tom and Tony then detail the actions they took to extend duration and how when they lifted the trade it was a winner. Tony noted how to use the TOS system when rolling an iron condor (or just one side) and why it is designed that way. Tom noted that because it was a defined risk trade more traders would be comfortable in managing the position rather than exiting it and taking the loss.
The second trade was also placed in “Bob’s IRA account. It was an August tight Jade Lizard (a short strangle with a long upside call for protection). A short strangle cannot be placed in an IRA account but because of the long call portion it is allowed (the put is cash secured). The trade was placed on 7/10. The details of price and IVR were provided. The individual strikes, credits and total credit was noted.
Things were not looking so good on 8/17 and there were just four days to expiration. A graph displayed the price action which showed why the trade was (at that time) a loser. Tom and Tony explained what they did to manage this trade and turn a loser into a small winner. Each of the actions taken is noted in detail.
Watch this segment of “Anatomy of a Trade” with Tom Sosnoff and Tony Battista to examine this short Iron Condor in COST and this Jade Lizard in UVXY to learn the details of what they did and why, so when you are faced with a losing trade you will have the tools to hopefully turn a loser into a winner too.
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