This trade got ugly, quick. It didn’t help that when the trade was put on, we saw a big gap up on the news that they were going to do a big share repurchase program.
The stock really hasn’t looked back since then, and we’ve got earnings coming up. I’m going to exit out of the trade to cut any further losses that can occur.
Sell to close 6 Jan 120/130/140 Put butterfly at 2.15
Sell to close 3 Jan 110/120/130 put butterfly at 0.70
With that size, total loss is around 1250, which is on the upper end of the risk spectrum. Looking back, this trade would have been fine if we had waited for a true parabolic signal. Volatility was compressing too much, so the bet on bearish volatility was wrong here.