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Markets were just see-sawing back and forth, when I was the opportunity on Friday night, actually it was already Saturday morning at about 1:30am Singapore time.

I saw on the technicals moving back up from the trough; fast and slow stochastics cutting up from below, Chikou flattening out, so I took on my gut feel and sold the option at 1.5933.

Remember our breakeven was 1.5990, that gave me a trading profit of 57bps.  You will recall that I wrote an update on October 9th and made the decision to hang on to this option trade alittle longer.  Well, the Ichimoku is telling me that this trade has run its course.  The payout wasn’t great, a meagre 0.45:1.  Let’s not forget that this option cost me 125bps in premiums.

The lesson learnt here is that the markets are getting tougher and more dangerous!  As traders, we are taking on more risks, in this case, paying more for options and the potential payout is not commensurate to the risk we are taking.  Why?  Volatility is high.

When I woke up on Saturday morning and checked what happened in the NY afternoon session and closing……….Wow!  By closing of the NY session, the Tenkan has firmly cut up the Kinjun from below, it broke through the cloud from below and also went above the 200 day MA.  So, in hindsight it was good that my gut feel prompted me to take profit on the option…………..whew!

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