Today the ES Dropped at the open all the way to 2067 but then rallied to 2091.50 and then back to pretty much where it has been in the mid 2080s.
How has our trade fared?
Well, it’s actually up slightly — even though the index moved up slightly.
Because we got time decay for Tuesday and we are expecting expiration on Friday. Remember, our bet is that SPY stays below 209 in order to realize our estimated $1500 target profit.
Since the November option is closer than the December option, the November option will get hit by time decay more than the December option will.
So the difference right now is 973-621= $350 — that’s higher than yesterday’s $250.
Of course what matters is that we stay below 209 for SPY. Between 209 and 212.5 we start to accumulate losses. I think the probability that this happens– that new all time highs get hit on a Friday during Thanksgiving weekend is extremely low– hence worth the bet because the probability of being wrong is relatively low.
Today: trade is +$350