Update 5/11/10
Well sometimes the dumb trades work out. GS eventually capitulated today, vol declined along with the move. So I’ll make an adjustment to chip away at some of the upside risk I created yesterday. Even though volatility continued to fade a bit, the risk adjustment trumps in this instance.
Adjustment
-5 140c/+9 145c $0.95 net debit
The more aggressive alternative is to add five -140/+145/+150 ladders for about 1.85 credit each. This trade, which I’ll reject, further secures the downside with all kinds of credit, leaves some upside leverage but would require a very swift rally move. There’s already a bit of gamma in the trade anyway so I’ll opt for the “safer” adjustment listed above.
Net position
-5 140c/+5 150c/+2 155c/+2 160c/+1 170c
-1 165p/-1 145p/+1 135p/+2 130p
Net overall credit is $44.67
From: OptionClub@yahoogro
Sent: Monday, May 10, 2010 10:17 PM
To: OptionClub@yahoogro
Subject: RE: [TheOptionClub.
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
Sent: Friday, May 07, 2010 10:32 PM
To: OptionClub@yahoogro
Subject: RE: [TheOptionClub.
Update 5/7/10
GS stabilized (temporarily?
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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