Option Trading Articles: Re: [ConservativeOptionStrategies] Adjustment of current SPY diagonal leapspread position

Tuesday, April 13, 2010

Re: [ConservativeOptionStrategies] Adjustment of current SPY diagonal leapspread position

Dr. Joe,

Why you sell new April10 120 call not May since only 4-5 days left expiration? I asked you the adjust question about a week ago because the quick moving up of SPY, and you said should do less adjustment. I guess my question is when you should do adjustment, ie. how much time value left is considered too little so we should adjust positions?

Thanks,

Mike

--- On Mon, 4/12/10, joe & leigh <gass20@aol.com> wrote:

From: joe & leigh <gass20@aol.com>
Subject: [ConservativeOptionStrategies] Adjustment of current SPY diagonal leapspread position
To: ConservativeOptionStrategies@yahoogroups.com
Date: Monday, April 12, 2010, 10:27 AM

new position established 03/09/2010 spy, an etf and adjustment

initial leap position had a delta of 0.9 so i sold at ratio of 9:10 and sold short call atm
the short call had almost no time value today remaining so i btc the short call position, stc 1 long leap position to cover most of the cost ...then sold the april 120 atm short call.....ratio of 7:9 thereby maintaining upside protection.. ...drjoe

04/12/2010 Sell To Open 7 SPY Apr10 120 Call $0.77 $523.96
04/12/2010 Buy To Close 9 SPY Apr10 114 Call $6.05 ($5,460.05)
04/12/2010 Sell To Close 1 SPY Dec12 80 Call $41.94 $4,178.97
03/09/2010 Sell To Open 9 SPY Apr10 114 Call $2.18 $1,946.92
03/09/2010 Buy To Open 10 SPY Dec12 80 Call $36.30 ($36,315.11)