Drop and Roll!!!

When the market moves against you, Roll!

Last week I made a substantial profit with Nvidia Call Credit Spreads while the market was dropping. However, come Monday of this week I had to give some of that profit back and roll my positions because the market was strengthening leading up to today’s Earning report.

I made the mistake of trying to reverse the Analysts. What I mean by that is betting the reverse of what the “experts” predicted. Analysts predicted that Nvidia would be over $500, and I was thinking that was overvalued and had my spreads at $460 and lower.

That’s ok. When you realize your mistake as a trader you have the opportunity to fix it. On Monday I inverted my spreads from Call Credit Spreads to Put Credit Spreads, selling them to people who were Gambling against the trend. It was a good move because as of an hour ago, Nvidia beat their estimates and soared above $500 and I’m so glad I rolled when I did!

There’s no better feeling to an Options Seller than to see the IV and the value of your options get absolutely crushed. My goal as a trader is to be like BJJ blackbelt Kron Gracie, putting the Options I sell in a Guillotine choke until they fall asleep :p

The great thing about Credit Spreads is that they give you plenty of room to change your mind as they aren’t as directional dependent as other instruments, and Theta is on your side.

Don’t be afraid to change your mind and remember… when there is Fire, DROP AND ROLL!