I can't tell you what to do with your money. Here is what I would do....
(1) You need a trading plan for diagonals that includes adjustments
(2) You could Close the trade for a profit if you are not comfortable
with your position.
(3) If you want to stay in your trade, you will need to roll your short
puts soon. Your delta's are very high (not getting any time decay) and
could be adjusted down to an at the money strike or further out of the
money. You could pay for this by rolling down your long strikes to a
delta near -.80. Your delta's are over .95, I would roll them down
and either increase my position size with the proceeds or book the
profits. For example:
Roll the Jan12 80 puts to 65 for a -.77 delta. This locks in your
volitility and price gains for the long puts. Then take some of the
proceeds roll down the short puts so your delta difference is about .40
as you approach expiration. You could also be assigned here with these
high short delta's (but that may be part of the plan?) Roll the 55
and 56 short puts to 49 .
If you need an example trading plan for diagonals I can point you to
some I have found.
As always do your own analysis and make your own trading decisions.
Trade your plan and plan your trade.
Hope this helps - Good Trading,
DLo
RobertH wrote:
> I have a diagonal leap put spread going in XLE (current price 49.68). Here are the details:
>
> long 13 XLE Jan12 80 puts cost basis 24.35 (current price 31.65) delta -.95
>
> Short 5 Jul 55 puts cost basis 1.59 (current price 5.75) Delta -.91
>
> Short 5 Jul 56 puts cost basis 1.98 (current price 6.70) Delta -.94
>
> The delta of the entire position stands at -296.20. I'm at a loss as to what to do with this position. I'm sure the huge negative delta is due to the 3 more leaps I have than short puts. I've been reluctant to take off the shorts since my history dictates that as soon as I do, the underlying changes direction and starts shooting up.
>
> Any Suggestions?
>
> Thanks,
> RFH
>
>
>
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