The 3Dimensional Trading Breakthrough
You also want an ePaper? Increase the reach of your titles
YUMPU automatically turns print PDFs into web optimized ePapers that Google loves.
Brian Schad<br />
Date<br />
Futures<br />
Option 1<br />
(Original<br />
Insurance)<br />
Option 2<br />
(Short/<br />
Covered<br />
Option)<br />
Overall<br />
Position<br />
Risk<br />
Current<br />
Profit/Loss<br />
Start Day<br />
(“SD”)<br />
Bought<br />
Long @<br />
6605<br />
Bought<br />
66 put for<br />
1.60 pts.<br />
N/A<br />
1.65 points<br />
[$660]<br />
N/A<br />
SD + 4 6945 .45 points<br />
Sold 70 call<br />
For 1.17<br />
pts.<br />
.43 points<br />
[$172]<br />
Keep in mind, this position profile has now changed from “unlimited profit potential,<br />
limited risk” to “limited profit potential, limited risk.” How am I supposed to “let<br />
my profits run” with this new profile, you may be asking? Just remember, the<br />
market must be going UP for my “long” position to profit. I determined that the<br />
market was shifting momentum (short-term) when August Cattle traded at 6945<br />
for whatever reason – trendline breakout to the downside, heavy volume on a<br />
short range day, or volatility breakout to the downside. Whatever the reason, my<br />
responsibility as a professional trader is to minimize my risk at every opportunity<br />
just as I was taught to initiate a trade at every opportunity! If the trade was meant<br />
to be, the profit from higher cattle prices will take care of itself. If not, my risk<br />
has been reduced substantially and I will still most likely make a nice profit on this<br />
trade. Before we continue with this trading scenario, I will detail this trade in a<br />
more concise format now:<br />
“We are what we repeatedly do.<br />
Excellence, then, is not an act, but a habit.”<br />
– Aristotle<br />
- 87 -
Change language