Viky
No problem, it's always interesting having a look at how others trade and bouncing ideas around.
After your adjustment, I think your current position is now;
+2 19p / -2 21p / -2 21c / +2 22c for a net credit of $200 [synthetic debit =$0.00]
If we deconstruct / dissect this position, you end up with
+2 19/20/21 Flies - current price approx $0.20 each
+4 20/21/22 Flies - current price approx $0.50 each
+2 21/22/23 Flies - current price approx $0.25 each
+2 22/23 Call verticals - current price approx $0.05 each
With the spot price at approx 21, it might be tempting to liquidate some of the value in the 20/21/22 flies which you could sell for $0.50 each.
However, given you want to simplify the position as we approach expiry this Friday, why not consider buying the 21 straddle [+1 21p / +1 21c] as a start point.
Screenshot in the files section "1.03 LOW adjustment".
Cheers
James
--- In OptionClub@yahoogro
>
> Hi James, thanks for continuing to go over the LOW position. I had a look at
> the three adjustments in the word document and all of them good very good
> (risk graphs look very impressive). Here are some quick comments:
>
> Adjustment 1: looks good. What I ended up doing was very similar to your
> adjustment no 1 (instead of 23 calls i ended up buying 22 calls though).
> This removed the upside risk and will benefit if LOW comes back towards the
> 21 strike next week.
>
> Adjustment 2: looks very good. removes risk. keeps profit potential centered
> at 22 and 20 strikes.
>
> Adjustment 3: looks the best. even better that Adj # 2. not only keeps
> profit potential centered at 22 and 20 strikes, but also brings in the
> possibility of making big profits if LOW makes a huge move (below 19 or
> above 23) in either direction.
>
> The only little thing that I find against 2 and 3 is the fact that we are
> now pretty close to expiration and instead of adding multiple contracts to
> the core position, I would rather look at simplifying the whole position and
> closing it at some point next week.
>
> If we had 2-3 weeks before expiration, I am reasonably convinced that Adj 2
> and 3 would have been great choices as potential adjustments.
>
> Thanks once again for your suggestions. Would be great if you can continue
> sharing your thoughts on potential adjustments on the blog or this forum.
>
> Cheers Viky
>
> On Sun, Sep 13, 2009 at 1:11 AM, jamesbparker999 <jp@...>wrote:
>
> >
> >
> > Viky
> >
> > I have posted some quick and dirty pnl graphs into the files section that
> > show 3 adjustments that
> >
> > - button up the risk
> > - leave 'free' flies
> > - add slingshots [ extra units at the wings ]
> >
> > Ends up with Max risk $10 / Max reward $190 ...
> >
> > Cheers
> > James
> >
> >
> >
>
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