fuzzballl 12:50 pm on Thursday, November 30, 2017
Tags: Hedge ( 75 )

SVXY put butterfly

#Hedge – Thanks to @vxxkelly …giving this a try.

Bought SVXY JAN 19 2018 110.0/105.0/97.5 Put Butterfly @ .22 credit

jsd501 1:03 pm on Thursday, November 30, 2017

So what happens if we get a 70% decline like we had in the past?
- fibwizard 1:09 pm on Thursday, November 30, 2017
  
  decline, whats a decline…
- vxxkelly 1:13 pm on Thursday, November 30, 2017
  
  @jsd501
  Unless $SVXY gaps below $100, the only way that it drops by 70% is for it to pass through the butterfly on the way lower, so he will have opportunities to take it off for a profit. If it does make a huge gap lower, his loss is capped @ about $228 no matter how far down it drops. This really works best for a moderate pull back to $100’ish.
  - jsd501 2:05 pm on Thursday, November 30, 2017
    
    Thanks, I will look at the numbers again.
- fuzzballl 1:40 pm on Thursday, November 30, 2017
  
  Kelly explains it better than me so that’s a good post to read. This particular trade I moved the bottom of the fly up as high as I could and still be able to put the trade on for a credit. That’s why I went 97.5 on the bottom. Could’ve gone 95 for bigger credit but bigger max loss. Could’ve also gone 100 on the bottom for a debit which would be max loss.
  
  I split the difference and went credit with a much bigger size…
  
  EDIT…corrected. “Could’ve gone 100 on the bottom for a debit which would then be max loss.”
  - fuzzballl 1:48 pm on Thursday, November 30, 2017
    
    On a 10 lot size this works out to be:
    
    Max Gain: 2610
    Max Loss: 1140
    
    And of course a gain of 220 if SVXY continues up. Breakeven on the downside is 99.78
smasty 1:25 pm on Thursday, November 30, 2017

I want it too

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