I’ve been underwater and tapped out on my equity risk for the past few days. Friday I made a ballsy SPY trade, purchasing far out of the money weekly calls that expire Jan. 22nd.
With a 3 day weekend ahead I saw two scenarios on Tuesday:
1) Market gaps up, bears would be trapped and bulls chase.
2) Market gaps down and flushes out Tuesday or Wednesday.
For case #2 I placed bids on more of the same weekly calls GTC at absurd levels no one would think could get hit.
I only wanted to pay for two days of time premium because the move I am anticipating will be very quick and extreme.
Around noon I started getting filled… captured lottery ticket with strikes between $189 and $191... at prices below $.30, strikes between $189 and $191.
The market was pricing in a 5-10% probability these contracts will go in the money.
I figured it was more like a 25% chance...
Needless to say I am swinging for a right tail payout.
I tweeted out these trades... follow me @GOODGREED
Update: The weeklies hit over 100% profit around 3:30p.m.
Held for the grand slam.