Paragon Options – Nobody Ever Went Broke Taking a Profit

In today’s post we are looking at something slightly different in ParagonOptions.  In the past month or so we have been broadening the range of products we trade to include ETF’s instead of just purely futures options.

As well as obviously enabling us to trade a wider basket of products, it also allows us to target specific sectors.  Also due to the sizing of ETF products, it means that the products are available to people of all experiences and account sizes with many option contracts only costing around $50 for 1 contract, allowing clients to size their position accordingly.

On top of this, we have taken an extremely low risk approach to our ETF trades, to highlight that trading and especially trading options does not need to be a high risk endeavor.  Below I will cover just two trades we did in XLF (which is an ETF containing a basket of financials stocks) that returned a 100% and then 50% profit respectively.

To simplify things further, these trades were not complex or exotic options strategies, but instead were just a purchase of straight puts, executed at the right level, held for a few days and then taken off.


The Trades

The first trade was initiated whilst XLF was trading at just under 25.  We bought 20 of the July – 44 DTE (44 days to expiry) puts.  The sum total of this trade was only $900 and being as the trade only contained bought puts, this was our total risk.

The trade was placed after a good run up in the S&P and as we were looking for a reversal, it made sense to target the financials sector specifically as this is where we thought we would find the initial, and most weakness on any pullback.

Sure enough, only 8 days later we had seen a good pullback and a fall in the price of XLF from 25 to 23.  Due to the gearing of our options, we had a large gain of 100% and were able to take these off for $1780 total.

Five days later, after seeing another recovery in the price and XLF once again trading close to 25 (24.96) we initiated the same trade, although at half size.  The July options we had used were still good and not really suffering from time decay as they still had 31 DTE.

This time, the trade was held for a total of only 10 days where we were able to exit for a profit of 50% once more.


To Conclude

Although this is only a brief post compared to some of the more complicated structures we trade here at Paragon, it demonstrates a very important part of trading.

That is, that trading, and trades themselves do not need to be complicated.  Option structures can be simple, borne from simple ideas, and as long as the entry is good and the risk factors managed well, they can work beautifully.

Small base hits like this are what grow an account over time, trading is not about looking for that lottery ticket trade, but instead just taking small amounts here and there and growing your account over time.

Paragon Options is a service that focuses exclusively on futures and ETF options. By doing so we are taking advantage of superior premiums compared to stock options and asset diversification offered by futures. Paragon Options is a directional options service that focuses on Sectors – Indexes, Metals, Energies, Bonds,  and Commodities. CLICK HERE to learn more.



Written by:

Matt Gardiner

Matt is a highly experienced options trader of 17 years, having been a private client broker and an inter-dealer broker in the city of London as well as working internationally in Australia during the commodities boom. His specialty is a sophisticated use of options to create portfolios or “books” of options using multiple time frames, strikes and varying quantities.

05th Jul 2020

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