XLK DiagBFly


BTO $XLK Jan 22: $90 call / $125 put long strangle @ $50
STO $XLK Aug 21: $110 short straddle @ $6.70

Minimum cash out value of the LEAP strangle is $35. Whatever happens I get to keep the $6.70 for the first (aggressive) sale of a straddle, so that leaves ($50 – $35 – $6.70) = $8.30 to finance over the next 550 days or $0.015 per day.

Given the volatility of the underlying it will be a roller coaster ride, but doable.

On this kind of trade I want to get the max premium out of the first sale (hence the straddle sale) – recognizing that an aggressive roll will be needed on one of the sides. For sure with XLK, future short term sales will be strangles not straddles.