A day in the life of an ASX Options Game trader
- Fri 06 December 2024
Winning strategies of the top-performing players in the Game.
Key points
- This article provides an update on the recently concluded ASX Options Game.
- The top traders focused their attention on index options over the S&P/ASX 200 Index.
- The Options Game is a way to learn about options trading using virtual cash.
The ASX TradeFloor Options Trading Game has wrapped up with more than 11,000 game players experiencing the highs and lows of actively managing options positions.
The ASX Options Knowledge Hub has information on the features, benefits and risks of using options. Options can provide potential benefits in rising and falling markets, but short-term “bad luck” can also make options trading a frustrating experience.
The winning Game players found alternatives to being caught out by a stock heading in the wrong direction. We look at some of the choices to being “long and wrong”.
The Game’s top traders focused their attention on the S&P/ASX 200 Index Options - XJO (see chart below for index movement during the game)
Chart 1: S&P/ASX 200 Index
Source: ASX
As a hypothetical example, suppose a Game participant was long Index calls on Tuesday 29th of October. By Friday 1st of November, their calls have halved in value and the euphoria of holding a winning position is fast losing its appeal.
Torn between wanting to close out the position before the index potentially falls further, and optimism about a Trump election win and markets rallying, they are unable to decide one way or the other.
At this stage, one course of action might be to go back to the original reasons for their trade. These could be one of the following, for example:
- To gain exposure for a set period (end of the Game). If the intention was always to hold XJO options until expiry in November, the player would not get caught up in daily fluctuations in share prices. Whilst they would clearly like the index to move up without faltering, remember the old adage – ‘cut your losses and let profits run’.
- Having a set limit to close out their trade before losses grow. If their view was that they didn’t want to lose more than half their outlay for the option, then they could cut their losses and move onto the next trade, using the proceeds of the sale to trade another view.
Hindsight is a wonderful thing, and we now know the best course of action was option 1 - hold strong and don’t get caught up in daily market fluctuations.
No one, however, has a crystal ball or an unlimited bank - luckily the Game lets participants test these strategies without having skin in a real trade.
When moving to real life trading, “blind faith” is a poor way to manage positions, even in the unlikely event that doing nothing works out.
Going into a position long or short with a clear intention, and if need be, committing it to paper, is one way to avoid potentially costly knee-jerk reactions.
Top trading ideas presented by Ausiex during the Game
Back to the Game, here were the standout trade ideas (both positive and negative) presented by Lewis Taie during the Game.
| Strategy | Trade | Date opned | Price @ open | Price @ Game close | Return |
|---|---|---|---|---|---|
| Strangle | Buy 1 x IVV 19-Dec-24 $59.00 European Call @ $0.81 Debit Buy 1 x IVV 19-Dec-24 $57.00 European Put @ $0.975 Debit | 17/10/2024 | $1.785 Debit | $2.605 | 45.9% |
| Long call | Buy 1 x XRO 19-Dec-24 $154.00 American Call @ $5.28 Debit | 17/10/2024 | $5.28 Debit |
$21.22 | 302% |
| Covered Call | Buy 100 x AMP Shares @ $1.44 Debit Sell 1 x AMP 19-Dec-24 1.51 European Call @ 0.03 Credit | 23/10/2024 | $1.41 Debit | $1.48 | 4.9% |
| Bull Call Spread | Buy 1 x DXS 19-Dec-24 $7.25 American Call @ $0.24 Debit Sell 1 x DXS 19-Dec-24 $7.75 American Call @ $0.07 Credit | 30/10/2024 | $0.17 Debit | $0.07 | -58.8% |
| Synthetic Stock | Buy 1 x NDQ 21-Nov-24 $46.50 European Call @ $0.96 Debit Sell 1 x NDQ 21-Nov-24 $46.50 European Put @ $1.14 Credit | 6/11/2024 | $0.18 Credit Margin Required: $437 | $0.70 Credit (Premium received[0.18] + Intrinsic value @ expiry[0.52]) | 16% |
The next ASX TradeFloor Options Trading Game is scheduled to run throughout May and June 2025.
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Information provided is for educational purposes and does not constitute financial product advice. You should obtain independent advice from an Australian financial services licensee before making any financial decisions. Although ASX Limited ABN 98 008 624 691 and its related bodies corporate (“ASX”) has made every effort to ensure the accuracy of the information as at the date of publication, ASX does not give any warranty or representation as to the accuracy, reliability or completeness of the information. To the extent permitted by law, ASX and its employees, officers and contractors shall not be liable for any loss or damage arising in any way (including by way of negligence) from or in connection with any information provided or omitted or from any one acting or refraining to act in reliance on this information.
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