Fresh weakness pushed this week’s /ES short 7700 put under pressure again, so I closed it for a small, controlled loss and opened a new trade. The new one is designed to benefit from a big move in either direction.
Short put recap (simulated account, about $100K net liq):
Sold 1 /ES Oct 30 7700 put on Oct 9 for 40.25, a $2,012.50 credit
Closed today for 53.00, a loss of 12.75 points × 50 = $637.50
Reason: about $2K of upside wasn’t worth roughly 3.8x notional leverage, plus buying power that could jump to about $64K in a 10% sell-off
New trade, a synthetic straddle:
Bought 1 /ES Jun 17 2027 8000 call for 332, or $16,600 (about 0.48 delta, IV 14.54, priced off /ESM27)
Sold 5 /MES futures at 7745.75 to hedge about half the delta
Starts close to delta-neutral, with positive gamma and vega and negative theta, like a long straddle
TIMESTAMPS
0:00 Series recap and the credit math (×50 multiplier)
1:14 Chart review: where /ES was on Oct 9
3:03 Today’s P/L and buying power
3:16 Stress test: risk vs. reward
4:53 Decision to exit
5:15 Closing fill and loss math
5:49 Why an early loss is a gift: leverage and SPAN margin complacency
7:09 Setting up a trade for a big move either way
7:50 June 2027 options and the /ESM27 contract (cost of carry)
8:51 Checking liquidity, plus the 8000 call price and delta
11:07 Hedging with /MES (one-tenth the size of /ES)
11:45 Beta-weighted view: the synthetic straddle Greeks
13:10 Fills and the new position
Part 1: https://youtu.be/QrQRSOSTbu8?si=1fH5vDFsI5DiF7q6
Part 2: https://youtu.be/KDqJ6QjyzWU?si=DI3hUTIesBPqYgoq
Futures and Futures Options playlist: https://youtube.com/playlist?list=PLJRiSlNm-qB0&si=rvboxLHb8XO9jGPs
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DISCLAIMER
This video is for educational purposes only and does not constitute investment, financial, or trading advice. No recommendations to buy or sell securities are being made. All examples are hypothetical and for illustration only. All investments carry risk, including the possible loss of principal. Options trading involves significant risk and is not suitable for all investors. Past performance is not indicative of future results. Consult a qualified financial adviser before implementing any strategy, and review your financial situation, risk tolerance, costs, fees, and tax implications. Options trading requires broker approval, and not all strategies are permitted in all account types. Returns shown are hypothetical and not guaranteed. Market conditions can change quickly, and results will vary based on market performance, timing, and execution. Read Characteristics and Risks of Standardized Options from your broker or at
[www.optionsclearing.com](http://www.optionsclearing.com/) before trading options.
