fuzzballl 10:08 am on Thursday, January 18, 2018
Tags: ShortStrangles ( 716 ), SyntheticStock ( 356 )

AAOI

#ShortStrangles – Still slogging away on this. Considering tripling the size and rolling it into #SyntheticStock . Might get me out of it sooner..

Bought to Close AAOI JAN 19 2018 37.5 Calls @ .05 (sold for .90)

Sold AAOI JAN 26 2018 34.5 Calls @ .70

tabortrader 10:32 am on Thursday, January 18, 2018

Applaud your patience on this tough ticker. I bailed last summer with a loss…
- fuzzballl 10:51 am on Thursday, January 18, 2018
  
  Luckily it was a small position (3 contracts) that has allowed my to stay in it. I didn’t manage it very well so my punishment is looking at it every day until I get even… 🙂 🙂
  
  In my defense, it’s tough when you get caught in a run from 60 to 103 and then a collapse back to 40 all in a few weeks. Crazy!
  
  Stuck with short DITM 80 strike puts so I rolled them to Jan 2019 and took the credit received and bought 20 strike puts. That took the heat off of a “going to zero” scenario capping my max loss at 60 points.
  
  All along the way during the swings prior to the implosion and weekly sales since I’ve collected 28.40 in premium. As soon as I collect 60 points or the difference between the price of the stock and 80 I’m bailing.
  
  Need to collect more premium or a rally in the stock from here to get out.
  
  60 max loss minus 28.40 premium leaves 31.60 to cover max loss. 52 weeks to go so need about 60 cents a week assuming stock falls below 20.
  
  I believe at tastytrade they call this an “Anatomy of a Trade”. Could make a good segment for them if it works! 🙂
fuzzballl 11:53 am on Thursday, January 18, 2018

I’ll know more once I run the numbers tonight but trying something here…LOL

Sold 1 Jan 2019 60 put and bought 9 Jan 2019 20 puts @ 5.40 credit.

This makes the position:

Short 3 Jan 2019 80.0 Puts
Short 1 Jan 2019 60.0 Put
Long 12 Jan 2019 20 Puts

I think what this does is allows the trade to start making money on an implosion below 20. Downside is it raises my breakeven a little. Doesn’t really increase the weekly sales required by too much since they’re spread out over a year.

Looking at the chart on this thing…one little hiccup and could be a single digit stock again. If it goes to zero it’s a bigly winner. Heads back up and I’m looking for a scratch.

Overall didn’t change the margin requirements at all and put some cash in the account. Still just $700 margin hit to carry the whole thing with TDA portfolio margin.
hcgdavis 7:00 pm on Thursday, January 18, 2018

Converting to synthetic has allowed me to recover those big moves quicker than just going with CC.
- fuzzballl 7:07 pm on Thursday, January 18, 2018
  
  Unfortunately it’s such an old trade that it’s gone beyond my limits for synthetic repair. I’d have to increase the position size so much that I’d be adding way to much risk in the event of a CH 11 filing or if the stock fell back to low single digits. Wish I would’ve had the synthetic repair strategy way back when this first started moving against me.
  
  Pretty happy where it is now. Can still easily sell enough weeklies in the next year to get to even and if it happens to implode it will be a bigly winner if they go under. Absolutely completely stress free at this point.