[TheOptionClub.com] Re: IWM March Reverse IC

 

Ricky

Interesting trade and the 'free' call fly is looking good; but in order to achieve this you are financing by selling OTM puts into expiry; how many naked puts are you willing to carry in order to finance further adjustments to the call side if the market continues upwards; looking at current prices you would probably have to sell puts / buy butterflies in a ratio of 1 put : 2 flies to be premium neutral; personally, I would be looking to take the downside risk off the table as we go into expiry and manage/liquidate butterflies seperately.

Look forward to seeing how this evolves ...
Cheers
James

--- In OptionClub@yahoogroups.com, Ricky Jimenez <rickyjim@...> wrote:
>
> To continue the saga of my paper trading of this methodology for AAPL,
> GOOG, IBM, IWM, RIMM, when IWM went tnrough my call short strike, 65,
> today, I completed a "free" call butterfly and turned the put spread
> into a ratio. If IWM passes 66, I will see if I can finance
> extending the fly to a condor by selling the 63 put. Comments are
> welcone.
>
> Here are the details:
> Original Position, 2/22 IWM between 63 and 64, 26 reverse ICs at $.75
> db.
> -62p + 63p +64c - 65c (.90,1.25, .94, .54)
>
> 3/3 IWM pierces 65, -62p -65c +66c (.27, 1.22, .71) for .76 cr.
>
> Total position: -2*62p +63p +64c -2*65c +66c
>
> Graph attached.
>

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