The thought was to SELL the big fat straddles at $8 or so.
As far as selling the verticals in the mock trade, it was all about taking
out some risk. kind of deviated from the theme of the trade a bit as far as
buying or selling vega (though I of course sold vega by selling the deltas
of the verticals), but whenever the market presents you with an opportunity
to scale out a big chunk of risk, it's probably prudent to take it. yes, I
added some upside risk, but by selling into a directional move with vega
declining, this is often a very manageable risk to absorb.
-----Original Message-----
From: OptionClub@yahoogro
Behalf Of Ricky Jimenez
Sent: Tuesday, May 11, 2010 8:36 AM
To: OptionClub@yahoogro
Subject: Re: [TheOptionClub.
It is fine with me Michael if you want to cancel the 5/10 adjustment.
I apologize if my comment that we were now in the "home stretch"
caused you to think that this was expiration week.
But I was really confused by what else you said below. You seemed to
be saying you wanted to sell 145 straddles but they were too
expensive. Did you mean buy them? Since you had a big profitable
tent pole at 145, it certainly makes sense to buy 145 straddles, when
they are cheap, to flatten down the profit tent so as to bring more GS
expiration values under it. Then I was confused by the selling of 6
145/150 call spreads. It did eliminate downside risk but it lowered
the upper B.E. point to 148.20 with real horrors above that. Was that
based on a directional opinion for GS for the coming week?
On Mon, 10 May 2010 22:38:17 -0500, "mcatolico"
<mcatolico@mindsprin
>Oops. I'm completely out of (most of) my positions this month so just a
>spectator.
>
>Okay well let's let the trade idle here anyway.
>
>
>
>From: OptionClub@yahoogro
>Behalf Of Murthy N
>Sent: Monday, May 10, 2010 10:33 PM
>To: OptionClub@yahoogro
>Subject: Re: [TheOptionClub.
Vega?]
>
>
>
>
>
>
>
>
>Michael,
>
>
>
>Great posts. The expiration is NOT this Friday, it is next Friday. This is
>one of those 5-week months.
>
>
>
>So $8 doesn't look that whopping any more :-).
>
>
>
>Murthy
>
>
>
>On Mon, May 10, 2010 at 8:17 PM, mcatolico <mcatolico@mindsprin
wrote:
>
>
>
>Update 5/10/10
>
>
>
>I guess if you left the market last weds. and took a nice long weekend
you'd
>think you missed some pretty uneventful flat trading. It's all about your
>time frame I suppose.
>
>
>
>At any rate I can't see anything really great to do with GS. The atm
>straddle has a whopping $8 or so of extrinsic value with just 4 trading
days
>to go. Normally I'd be looking to sell that but who knows where this can
go?
>
>
>
>I'd also consider selling deltas into this rally and trying to shore up the
>downside so that there'd be no risk there - something like selling six
>145/150 call verticals should do the trick.
>
>
>
>Why not? I think that would make Sam happy!
>
>
>
>Adjustment
>
>-6 145c/+6 150c 1.95 credit each (11.70 net credit)
>
>
>
>Net position
>
>-9 145c/+5 150c/+2 155c/+2 160c/+1 170c
>
>-1 165p/-1 145p/+1 135p/+2 130p
>
>
>
>Net overall credit is $45.62
>
>
>
>
>
>
>
>From: OptionClub@yahoogro
>Behalf Of mcatolico
>Sent: Friday, May 07, 2010 10:32 PM
>
>
>To: OptionClub@yahoogro
>Subject: RE: [TheOptionClub.
Vega?]
>
>
>
>
>
>
>
>Update 5/7/10
>
>
>
>GS stabilized (temporarily?
>rebalance the trade slightly as GS hovered around 143.
>
>
>
>Adjustments
>
>Add a call bwb +1 140/-2 145/+1 155 for 0.32 net credit
>
>Sell the 145/140 put spread for 2.10 credit
>
>
>
>The idea here is simply to kind of hover the trade around the 145 strike
>with what will look like mostly a butterfly with a bit of far otm gamma all
>in preparation of expiration week.
>
>
>
>
>
>Net position:
>
>-3 145c/-1 150c/+2 155c/+2 160c/+1 170c
>
>-1 165p/-1 145p/+1 135p/+2 130p
>
>
>
>Net overall credit is $33.92
>
>
>
>
>
>
>
>
>
>
>
>
>
>
------------
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