Theta Trend

Yesterday I closed my trade in Natural Gas for an .81 debit.  Initially the trade was going in my favor, but them price broke down and closed below my trailing stop on Monday.  As a result, I exited the trade Tuesday morning and moved on.

Later in the day yesterday, I was able to get filled on a Gold vertical in the December Quarterly options with about 63 days to expiration.  I had the order to sell the 125/120 GLD Put vertical for a $1.00 sitting in the market and it was filled around midday.

Note that whenever I enter a trade I know exactly what price I need to sell the vertical spread at to have a favorable risk/reward ratio.  If it isn’t possible to achieve the risk/reward ratio that I want, I don’t trade.  The ability to not trade is a big, big deal.  Options market makers and institutional trades have no choice and must trade, but as retail traders we can wait.

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