Path Dependent » trades http://pathdependent.com Programming, Complex Systems, Trading, and Introspection Sun, 22 Aug 2010 19:08:23 +0000 http://wordpress.org/?v=2.8.4 en hourly 1 My First Perfect Trade http://pathdependent.com/2008/11/20/my-first-perfect-trade/ http://pathdependent.com/2008/11/20/my-first-perfect-trade/#comments Thu, 20 Nov 2008 09:28:19 +0000 John Nelson http://pathdependent.com/?p=82

By perfect trade I mean executed well and taken for the valid reasons. In yesterdays post, Liquidity Black Holes, I stated that I bought NOV SPY 83 Puts for $2.20. I sold them at the end of the today for $6.46. This was a lot of fun.

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On November 13th, the SPY dropped bellow $840, and then catapulted to $900 for a monstrous gain by the days end. I believe that catapult could have been caused by, in unison, investors covering margin calls for leveraged long positions and short sellers covering as the rise grew stronger. I have very little empirical evidence of this and it is sufficiently weak to prohibit me, out of embarrassment, from posting it.

I bought NOV 83 put options on SPY earlier today at $2.20. This time around, I believe their will be A LOT of sellers and no buyers. Alternatively, if it does not fall into a liquidity black hole, I see very little upside between now and Friday close.

I used 1% of my capital on this play.

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