Put Fly Call Buy In IWM

[Steven Place]

You can do the same trade in RUT if you want to trade more size, but IWM has the liquidity.

We talked about the trade in the Market Wrap from April 8th in much detail.

Here are the trade parameters:

Buy 6 IWM May 105/110/115 Put Butterflies for 0.86

Buy 1 IWM May 112 Call for 4.53

If we see a rally to 117 (very possible) then we will roll the 112 call higher and add another set of butterflies

If we see a selloff under 108 then we will add some more put butterflies.

As it stands, plan for deployment of 2 more sets of butterflies, and this is a shorter term income trade… if IWM continues to fart around at these levels we’ll need to adjust to add some theta.

[Steven Place]

We’ve hit 20% return on capital with no adjustments, so close out here.

IF you want to try and milk the trade that’s fine, just keep a mental stop under 108 and above 112.

Also, if you want to get cute you could buy some Jun strangles to hedge off your gamma… something like the Jun 112/108 strangle, buy 1 for every 3 spreads you have on.

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