I am sure the educational value is much more than the expected profit.
;-)
I am fascinated by the last play. I am trying to discover the
algorithm but have not succeeded, so far. You wanted to flatten the
expiration graph between 130 and 150 and what you did was to add
enough to the position to cause 3(00) short synthetic stock at 135
and 2(00) long synthetic stock at 140. Is that an example of a famous
trick that market makers are taught? It is vaguely reminiscent of the
decomposition techniques that Cottle has in his book.
On Tue, 18 May 2010 19:29:04 -0500, "mcatolico"
<mcatolico@mindspring.com>wrote:
>Update 5/18/10
>
>Ho hum another 5 point day in GS. I knew as soon as I gave up on downside
>leverage that Sam would come back to haunt me.
>
>Oh well getting this thing to risk free strangle today...
>
>Adjustments
>
>-3 135c/+5 140c $4.35 net credit
>-2 140p/+4 135p $0.72 net credit
>
>Net position
>-3 135c/+2 140c/+5 150c/+2 155c/+2 160c/+1 170c
>
>-1 165p/-2 140p/+3 135p/+2 130p
>
>Net overall credit is $45.25
>
>Not much left to do since this just acts like a couple 130/150 strangles for
>about $5 net credit. Unless GS collapses from here (or rockets). This
>should be the end of the trade. No idea how many contracts traded (someone
>might tally them but I'd guess 100-150 or so which means after all said and
>done a very modest $200-$300 profit on a very wild ride.
>
>
>-----Original Message-----
>From: OptionClub@yahoogroups.com [mailto:OptionClub@yahoogroups.com] On
>Behalf Of mcatolico
>Sent: Monday, May 17, 2010 9:46 PM
>To: OptionClub@yahoogroups.com
>Subject: RE: [TheOptionClub.com] GS TRADE [was:How do you manage your Vega?]
>
>Update 5/17/10
>
>Back in the ballgame...
>
>Well this whole trade could have been easily adjusted intraday to be
>essentially risk free (could have bought in the 145/150 call vertical a
>dozen times or so for less than $0.70 each) but we're using end of day here
>for illustration and GS rallied with market into the close.
>
>During expiration week, to me all bets are off, so to speak, with regard to
>vega and the focus is on doing whatever is necessary to eliminate risk. with
>that in mind, need to start reeling all the otm risk in a bit so...
>
>Adjustments
>+3 145p/-4 140p/-2 135p for a net debit of $4.40
>
>( this trade simply closes out the put side backspread wing and extra units
>that were sitting in inventory - sorry Sam, I've finally capitulated on a
>big sell off in GS; the trade goes flat now somewhere below 135)
>
>-3 140c/+13 145c/-6 150c for a net debit of $4.20
>(this trade takes out most of the call side risk though there'd be a bit of
>scrambling if this thing races toward 150)
>
>
>net position:
>-3 140c/+5 150c/+2 155c/+2 160c/+1 170c
>
>-1 165p/-1 135p/+2 130p
>
>Net overall credit is $40.18
>
>
>
>-----Original Message-----
>From: OptionClub@yahoogroups.com [mailto:OptionClub@yahoogroups.com] On
>Behalf Of Karen
>Sent: Monday, May 17, 2010 12:22 AM
>To: OptionClub@yahoogroups.com
>Subject: Re: [TheOptionClub.com] GS TRADE [was:How do you manage your Vega?]
>
>update 5/14/10
>
>sorry i've been out of town this weekend. with friday's close around 143 and
>premium still pretty strong, i'm reluctant to buy in the shorts just yet. i
>will add one small trade just to cover a little possible near term upside
>risk:
>
>+2 145c/-4 150c at $0.64 debit each (net debit $1.28)
>
>net position:
>-13 145c/+11 150c/+2 155c/+2 160c/+1 170c
>
>-1 165p/-3 145p/+4 140p/+1 135p/+2 130p
>
>Net overall credit is $48.78
>
>
>
>--- In OptionClub@yahoogroups.com, "mcatolico" <mcatolico@...> wrote:
>>
>> No change for 5/13/10. Premium is coming in rapidly but there's no real
>> reason to add to this position by selling it. and it's still a little too
>> expensive to buy in (though the gambler in me might buy the -145p/+2 140p
>> backspread a few times).
>>
>> -----Original Message-----
>> From: OptionClub@yahoogroups.com [mailto:OptionClub@yahoogroups.com] On
>> Behalf Of mcatolico
>> Sent: Wednesday, May 12, 2010 11:42 PM
>> To: OptionClub@yahoogroups.com
>> Subject: RE: [TheOptionClub.com] GS TRADE [was:How do you manage your
>Vega?]
>>
>> Ricky's correct on net position:
>>
>> Net position(corrected)
>>
>> -15 145c/+15 150c/+2 155c/+2 160c/+1 170c
>>
>> -1 165p/-3 145p/+4 140p/+1 135p/+2 130p
>>
>> Net overall credit is $50.06
>>
>
>
>
>
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>discussion and educational purposes only. No statement contained in any
>materials from TheOptionClub should be considered a recommendation to buy or
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>investors are encouraged to consult a qualified professional before trading
>in any security. Stock and option trading involves risk and is not suitable
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>in TheOptionClub have varying backgrounds and degrees of experience in
>option trading, and that regardless of experience each member is considered
>a student. As such, any information distributed through TheOptionClub
>should be considered with a critical mind and not relied upon as an
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