Thursday, March 4, 2010

Re: [TheOptionClub.com] Re: IWM March Reverse IC

 

Thanks for the comments Jim. I am not very good at thinking two moves
ahead so I am not sure whether I will sell more premium at the 62
strike in order to buy another call fly to extend a 64/65/66/67 call
condor position to a 64/65/67/68. I could, instead, leave the 62
puts alone and hope that I can do a -64C+65C+2*66C-3*67C+68C to end up
with a cheap call butterfly. If I go ahead with the plan to sell the
63 puts, I will put a buy stop at the naked 62 puts for protection.

On Thu, 04 Mar 2010 14:25:30 -0000, "JP" <jp@jpfinancial.co.uk>
wrote:

>Ricky
>
>Interesting trade and the 'free' call fly is looking good; but in order to achieve this you are financing by selling OTM puts into expiry; how many naked puts are you willing to carry in order to finance further adjustments to the call side if the market continues upwards; looking at current prices you would probably have to sell puts / buy butterflies in a ratio of 1 put : 2 flies to be premium neutral; personally, I would be looking to take the downside risk off the table as we go into expiry and manage/liquidate butterflies seperately.
>
>Look forward to seeing how this evolves ...
>Cheers
>James
>
>
>
>--- In OptionClub@yahoogroups.com, Ricky Jimenez <rickyjim@...> wrote:
>>
>> To continue the saga of my paper trading of this methodology for AAPL,
>> GOOG, IBM, IWM, RIMM, when IWM went tnrough my call short strike, 65,
>> today, I completed a "free" call butterfly and turned the put spread
>> into a ratio. If IWM passes 66, I will see if I can finance
>> extending the fly to a condor by selling the 63 put. Comments are
>> welcone.
>>
>> Here are the details:
>> Original Position, 2/22 IWM between 63 and 64, 26 reverse ICs at $.75
>> db.
>> -62p + 63p +64c - 65c (.90,1.25, .94, .54)
>>
>> 3/3 IWM pierces 65, -62p -65c +66c (.27, 1.22, .71) for .76 cr.
>>
>> Total position: -2*62p +63p +64c -2*65c +66c
>>
>> Graph attached
>

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