Last week, I bought a Dec 13600 Call at 50€ in order to act as a small hedge against a DAX climb and the threatened Nov 12800 - 13200 Call Spread. Thinking about this during the weekend, I realized that I could have made a better move by buying a bull call spread closer to the money.
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| Bull Call Spread. Source Wikipedia. |
I still would have had to pay 50€ and the maximum profits would have been capped to 200 points (950€ considering the paid 50€) but the hedge would have been bigger as the long position is closer to the money (13600 sits at 5 deltas while 13400 sits at 10 deltas).
Anyway, while the IV increased quite a bit, I guess due to the elections last weekend, and with a +0,30% increase in the spot value, I sold the 13650 Call at 51€ in order to enter in a bull call spread:
This trade allows me to recover the invested premium while caps my profits to 50 points (250€)
Now, I am thinking about deploying a proper bull call spread in December, which should be closer to the money. Ideally IV should drop a bit to make the purchase cheaper.
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