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Steven PlaceKeymaster
HD has rallied hard into resistance, and even though it has not hit my original target, this is as good enough of a place as any to take 1/2 off your size. You can re-add if we pullback to the high 77’s
Steven PlaceKeymasterFor the past week we have seen a parabolic move and the stock has blasted past 125 all the way to 130.
We will need to do 2 things.
1. Add our third butterfly.
Buy +3 Jan 120/130/140 Put butterflies at 2.60 or lower
2. Roll the lower fly higher.
Sell to close -3 Jan 125/115/105 Put butterflies at 1.30 or higher
Buy to open +3 Jan 120/130/140 Put butterflies at 2.60 or lowerIf you want, you can combine the two butterfly order buys.
This moves our breakeven to 120 and 135, and gets our theta back to a nice area.
This is a tricky position but we have a few months to work with it.
Steven PlaceKeymasterAs V has squeezed up to 202, we will have to manage this trade even further.
Since we are at max position, the next thing we need to do is roll the low calendar higher.
Sell to close Nov/Dec 185 Call Calendar at 0.90
Buy to open Nov/Dec 205 Call calendar at 2.10This will cut our directional exposure by half and increase the theta gains we have.
We will still exit out of this trade before earnings.
Steven PlaceKeymasterHow that the VIX has been poleaxed, it’s time to take this trade off.
Buy to close Nov 24/26 call spreads for 0.05
Buy to close Nov 20 calls for 0.40
Sell to close Nov 16 Straddle for 2.90Steven PlaceKeymasterNow that V has moved to 195, we can add the final third to our calendar.
Buy the Nov/Dec 195 Call Calendar for 2.05 or Lower.
This will put us into a triple calendar.
If we rally up to 200, we will close out the 185 calendar and buy to open the 200 calendar.
Earnings is at the end of the month so we want to exit before then.Steven PlaceKeymasterGS pulled back much further than our initial entry, so the trade is currently at a tiny profit.
Because earnings are tomorrow before the open, go ahead and close out the trade to remove earnings risk.
Steven PlaceKeymasterFDX ripped higher on stock repurchase news. This isn’t the best for our income trades, but since we are scaling in, we can add to the trade as planned.
Add the Jan 110/120/130 Put butterfly for 2.50 or lower.
Here is what the risk will look like now (assuming you’re doing 3 butterflies at a time)
Next add is at 125.
Steven PlaceKeymasterWith the big drop in the VIX, we’re now going to get delta neutral.
Buy +1 Nov 20 Call at 1.45 or lower
If we see a pop in the VIX again, we will resell that contract, continuing to reduce our basis. If the VIX gets hit hard, we will close out the rest of the call sales and call spreads.
Steven PlaceKeymasterWe’re going to reduce our long deltas in VIX again.
First thing to do: Sell -1 Nov 20 Call @ 2.25 or higher.
That will completely cap off our straddle.
Next, we will add some bear call spreads to help pay for the trade even more:
Sell -3 Nov 24 Call
Buy +3 Nov 26 Call
Credit: 0.30This will cut our max risk down to about -420. What we want now is either for VIX to stay at 20, or to get hit really hard on a deal, where we can then cover and go back to the original straddle for a better basis.
Steven PlaceKeymasterV has moved from 190 to 185, we will now add to this position.
Buy +3 Nov/Dec 185 Call calendars @ 1.90 or lower.
Steven PlaceKeymasterYGE just never looked back.
It’s going parabolic, so continue to raise stops. If YGE loses today’s low at 7.45 then exit the trade.
Also consider rolling the Oct 6 calls up to the Oct 7 calls.
Oct 6 calls now going for 2.30.
Steven PlaceKeymasterGoing to take some delta off by selling calls against our straddle.
Specifically, sell 2 Nov 20 Calls @ 1.40 or higher.
This moves our breakeven, reduces max risk, and decreses theta risk.
Steven PlaceKeymasterThe stock is breaking out after staying rangebound for much longer than expected.
Since we are in Oct options the theta risk has incresed. So I would recommend scaling 1/2 of your position and trailing a stop.
Steven PlaceKeymasterThe 78.50 level held, and now the stock has run into its recent high:
Take 1/2 off here and move stop up to 79.
Steven PlaceKeymasterThe stock hit the measured move target of 99, but it is pulling back right here.
Move up your stop to a loss of 94, which is the most recent pivot low.
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