By picking up that call spread we were able to mitigate some of the upside risk in the position, which was the right call after the easing of Ukraine tensions.
What we are going to do now:
1. Sell to close the call spraed hedge
2. Buy to open another set of butterflies.
3. Roll one of our put spreads higher.
What happens here is that 1 and 3 help to pay for 2. This will reduce the capital required in the trade, keep our delta low, increase our max reward (at these prices) and decrease our odds.
Here’s the trades:
1. Sell to close Apr 1880/1900 call spreads at 10.00
2. Buy to open Mar 1870/1890/1910 Call butterfly for 5.15
3a. Buy to close Mar 1800/1750 Put spread at 1.50
3b. Sell to open Mar 1830/1780 Put Spread at 3.80
Here’s the new position risk:
