MDLZ DiagBFly – analysis of a campaign

Original Trade initiated on June 17, 2020:

$MDLZ @ $52.74
BTO 20 MDLZ Jan 22: 40 Put / 65 call long strangle @ $4.65 (total cost of trade = $9,300).
583 days left to sell more premium.

Analysis:

Closed out position on January 8, 2020, MDLZ trading at $58.19.

Days in Trade: 205 – 29 weekly option periods.

Buy transactions: 34 – Bought premium total: $59,618

Sell transactions: 34 – Sold premium total: $67,873

Note: more trades than weekly option periods reflect making ‘scalp’ trades within the week.

Net premium collected: $8,255 on the 20 contract original trade.

% return for 205 days = $8,255 / $9,300 = 89%. (my thinking on demonstrating returns, others may suggest alternatives).

Points for reflection: Early on it was clear that the premiums were not large enough to generate enough $returns – I mentioned after a few months I was going to stop this strategy and move into higher priced underlyings – IBB in this particular case. Despite this, I carried on mainly to practice discipline on rigorously rolling and adjusting week after week. I’m glad I did, because it becomes a habit, and one does not really care about how the underlying moves – you just intuitively know where to roll to, even at the expense of rolling out in time.

EWZ was my starter using this Diagonal Butterfly approach (I took it from the seminal work on options by Larry McMillan).

The percentage returns on capital deployed are good because the LEAP strangle was an OTM structure. My current preference is for an ITM LEAP strangle strategy – mainly because I think it would handle a strong down move better – however it is obviously ties up a lot more capital. The jury is still out on this.

The whole idea of the strategy was to deploy capital with inbuilt protection, hoping to generate decent returns but able to handle a defined amount of volatility. To that extent it worked. The strategy continues in other underlyings: EWZ, FAS, IBB, XLK, XLY. Higher priced stocks that generate more premium which I feel gives more flexibility on the rolling strategy (the key part of managing the campaign).

#DiagonalButterfly

RH BWB – adjustment

Original trade from Dec 21st:

BTO RH Jan 08, 465 / 455 / 435 Broken Wing Put Butterfly @ $3.04 credit

RH exhibiting uncharacteristic weakness so using some of the credit to finance buying some more time for the Short Put spread (455/435) to work:

Buy Jan 08 455/435 put spread / Sell Feb 12 455/435 put spread for $0.39 debit.

If weakness continues expecting to pocket $10 from the long 465 / 455 put spread this Friday.

#BWB  

INTC covered calls

Stock bought @ $45.41 – wanting to sell covered calls when INTC crosses $50 (or thereabouts).

Sold half cover Jan 08 $50 calls @ $0.68.

#coveredcalls

NFLX Iron Cockroach

NFLX @ $509.

STO NFLX Jan 22, 510 / 520 Call credit spread + 505 / 485 Put credit spread @$13.10 credit for the combo.

Downside max loss $6.90 ($20 spread width – $13.10 credit received). Downside breakeven NFLX @ $490.

No risk to the upside – keep ($13.10 – $10.00) $3.10 residual credit.

#IronCockroach 

INTC – Married Put

BTO 1x INTC Jan 23, $42.5 long put @ $7.75

BTO 1x INTC stock @ $45.40

Strategy: wait until INTC reaches $50.00 and then start selling covered calls. Consider selling 0.5x short puts against the 1x long puts. Give INTC 3 months to reach that $50 target, if not sell stock and close out long put.

Using INTC as a test case before I start looking for bigger fish to fry. Learn to manage the discipline, the boredom, and the timing of selling premium against the core position.

Thanks @optioniceman for the alert.

#MarriedPut

RH BWB

Placed late Friday – back to the well (not sure how long the lifespan of this process is!).

BTO RH Jan 08, 465 / 455 / 435 Broken Wing Put Butterfly @ $3.04 credit

No risk to the upside (keep the credit) – downside breakeven $442.

#BWB  

Expiration

NFLX #IronCockroach  Dec 18, 515 / 520 Call credit spread + 510 / 500 Put credit spread @$6.31 credit for the combo. Put credit spread expired worthless, Call expired ITM so max loss of $5.00, offset by the combined entry credit of both spreads of $6.31, so net credit of $1.31.

RH #BWB 410 long put expired worthless. This is the leftover leg of the 460/440/410 BWB. I closed out the 1x 460 / 2x 440 put spread for a credit of $8 on Wednesday. I highlight the amazing move of RH on Friday that went from $435 to $455. I thought I’d missed a chance for a $20 closeout on butterfly, closing out for $8 – but as I kind of thought, anything can happen on expiration Friday. So note to self, bird hand better than bird bush.

RH BWB – Profit Taking

RH currently trading @ $441

Closed out the Long Put credit spread of the BWB, selling the 1x 460 / 2x 440 put spread for a credit of $8. Max profit for a perfect closeout would be $20 – but attack of the gammas by Friday would make that extremely unlikely, unless I went for expiration assignment which I was willing to, but prefer not to do. Trade was placed for a $2.25 credit so net net credit of $10.25. I’ll settle for that.

Leaving the long 1x 410 puts open waiting for a big down move (who knows?).

Original trade placed on November 23:

(RH currently trading @ $442

BTO RH Dec 18, 460 / 440 / 410 Broken Wing Put Butterfly @ $2.25 credit

No risk to the upside (keep the credit) – downside breakeven $415.)

#BWB #CreditCredit trade

NVDA Iron Cockroach – adjustment

Trade placed when NVDA @ $543, currently @ $532. Rolling out the Put spread to Jan 29 buying more time for a debit of $0.49 – so net credit now $5.91. Look to layer on a credit call spread when the 545 / 550 expires on Friday.

Original trade:

(STO NVDA Dec 18, 545 / 550 Call credit spread @$2.16 credit for the $5 wide spread.

STO NVDA Dec 18, 540 / 530 Put credit spread @$4.24 credit for the $10 wide spread).

#IronCockroach 

Expirations

Expired 1 x COST Dec 11: $375 /$370 long PUT Vertical / 2 x Dec 11: $365 / $360 short PUT Vertical – managed to sell the long PUT vertical @ $0.60 (strange that it filled 1 minute before market close) – the Unbalanced Condor was entered for a $0.51 credit so a net credit of $1.11.

Expired worthless ETSY Dec 11, 165 / 155 / 145 Broken Wing Put Butterfly (BTO @ $0.95 credit).

Expired worthless TWLO Dec 11, 325 / 315 / 295 Broken Wing Put Butterfly (BTO @ $1.40 credit).

AMZN

Bought to open AMZN Jan 15 2021 3,300 Call / Sold to open TSLA Dec 24 3120 Call @ 7.40 Credit.

Diagonal Back Spread – SBUX

Sell 1 x Jan 21 $105 call, Buy 2 x Apr 16 $110 call @ $5.64 debit.

Test case for how this setup performs over time. Ideally looking for structuring the trade so the sale of call finances all, or most of, the cost of the 2 long calls (McMillan thinks it is possible) – but I’m not too sure.

#DiagonalBackSpread 

NFLX Iron Cockroach

NFLX @ $513.

STO NFLX Dec 18, 515 / 520 Call credit spread + 510 / 500 Put credit spread @$6.31 credit for the combo.

Downside max loss $3.69 ($10 spread width – $6.31 credit received). Downside breakeven NFLX @ $503.

#IronCockroach 

NVDA Iron Cockroach

NVDA @ $543.

STO NVDA Dec 18, 545 / 550 Call credit spread @$2.16 credit for the $5 wide spread.

STO NVDA Dec 18, 540 / 530 Put credit spread @$4.24 credit for the $10 wide spread.

Total credit $6.40 – covers all the upside risk on the sold credit spread (and still keep $1.40 credit).

Downside max loss $3.60 ($10 spread width – $6.40 credit received). Downside breakeven NVDA @ $533. Should be able to manage downside rolls on the puts or manage assignment.

#IronCockroach 

NVDA BWB – in/out credit trade

STC NVDA Dec 11, 530 / 520 / 500 Broken Wing Put Butterfly @$0.71 credit : BTO @ $2.67 credit (Nov 23). Net credit received $3.38.

#BWB 

Expirations

Expired worthless TSLA Dec 04, 560 / 550 / 530 Broken Wing Put Butterfly (BTO $3.73 credit).

Expired TSLA Dec 04, 600 / 620 / 640 Call Butterfly (BTO $1.63 debit). Sold out of the 600 calls for $0.88 so net loss $(0.73). Apologies – the original post had the strikes as 620 / 640 / 660.

Expired worthless DOCU Dec 04, 225 / 220 / 210 Broken Wing Put Butterfly (BTO @ 1.62 credit).

#BWB  #Butterfly

NFLX BWB – closeout

BTC NFLX Dec 04, 490 / 480 / 460 Broken Wing Put Butterfly @ $0.49 credit

Trade opened on 11/24 for $1.40 credit so total net credit received is $1.89.

#BWB 

TDOC BWB – closeout

STC TDOC Dec 04, 192.5 / 185.0 / 172.5 Broken Wing Put Butterfly @ $1.50 credit.

Received a $0.78 credit when opening the trade (Nov 12) so a combined credit of $2.28.

#BWB 

TSLA

BTO TSLA Dec 04, 620 / 640 / 660 Call Butterfly @ $1.63 debit.

#Butterfly

DOCU & TSLA BWB

BTO DOCU Dec 04, 225 / 220 / 210 Broken Wing Put Butterfly @ $1.62 credit (downside b/e $213).

BTO TSLA Dec 04, 560 / 550 / 530 Broken Wing Put Butterfly @ $3.73 credit (downside b/e $537).

#BWB 

NFLX BWB

NFLX currently trading @ $478.50

BTO NFLX Dec 04, 490 / 480 / 460 Broken Wing Put Butterfly @ $1.40 credit

No risk to the upside (keep the credit) – downside breakeven $468.

#BWB 

TSLA Iron Condor

TSLA almost a #jadelizard @smasty160 follow:
Sold Jan 300 / 380 – 740 / 750 Iron Condor @ $6.92 credit.
The long $300 put is for bankruptcy protection.

NVDA BWB

NVDA currently trading @ $526.50

BTO NVDA Dec 11, 530 / 520 / 500 Broken Wing Put Butterfly @ $2.67 credit

No risk to the upside (keep the credit) – downside breakeven $507.

If NVDA starts moving down towards the lower long strike will add a half cover of long Dec 11 / Dec 18, $495 put Calendars. They are currently selling at $3.00. Could add them now and take off later – they have a wide profit window from $470 to $520 and should hold their value rather well during the early days of the trade. The calendars reduce delta and the negative vega allowing me to stay in the trade longer if required.

#BWB 

COST – Unbalanced Condor

COST @ $382

BTO 1 x COST Nov 20: $385 /$380 long PUT Vertical @ $ 2.77 debit
STO 2 x COST Nov 20: $375 / $370 short PUT Vertical @ $1.62 credit (x 2)

Total credit of $0.51 for the unbalanced Condor. Downside breakeven is around $372. No risk to the upside. Almost a carbon copy of a recent November trade, but this time for a credit and a wide profit zone.

#UnbalancedCondor 

RH BWB

RH currently trading @ $442

BTO RH Dec 18, 460 / 440 / 410 Broken Wing Put Butterfly @ $2.25 credit

No risk to the upside (keep the credit) – downside breakeven $415.

Going back to the well on this one (mea culpa) – but RH never goes down for long!

#BWB 

OptionsExpiration

Expired:
WSM 92.5 / 97.5 – 110 / 115 Call (Unbalanced Iron Condor 1 x 2) – keep the $3.73 credit
TWLO 220 / 240 / 250 Put Butterfly – keep the $0.86 credit
RH 340 / 360 / 370 Put Butterfly – keep the $3.15 credit
IBB 137 Put / 143 Call strangle – keep the $8.45 credit
ZM 440 / 450 Put – 680 / 690 Call (Iron Condor) – closed out the ITM put spread for $7 debit. Glad it was only 1 contract!

Assignments:
BABA 292.5 / 312.5 / 322.5 long Put spread – $10.00 credit – (part of 292.5 / 312.5 / 322.5 BWB Put Butterfly that was split up with the ITM 312.5 / 292.5 ITM short put spread rolled out to January (see here )

PFE 38.5 Call – exercised, so my PFE stock called away – a messy change of option contracts due to the merger/demerger. Happy to have this cleaned up.

COST – Unbalanced Condor (closeout)

Original trade for a $0.01 debit:

BTO 1 x COST Nov 20: $385 /$380 long PUT Vertical @ $ 2.45 debit
STO 2 x COST Nov 20: $375 / $370 short PUT Vertical @ $1.22 credit (x 2)

Closed out both verticals for a credit of $1.50.

Happy to avoid the gamma mashup for the rest of the week.

#UnbalancedCondor

ABBV – Oven Baked Election Proof – update

#sleepatnight

Original setup:

On 09/09/2020: BTO ABBV stock @ $92.19 
STO ABBV Nov: 90 call @ $5.25

BTO ABBV Jun 2022: 120 put : @ $38.42

ABBV pays a $4.72 per share dividend (5.1% yield).

Update: 11/17/2020: Stock is @ $99.70. A couple of short call rolls to the March 100 calls @ $5.62. (for essentially a scratch).

The stock is up $7.40 and the protective puts are down $7.00.

Payday comes when the short calls expire worthless (one day).

The setup is doing what it should do.

BX – Calls instead of Stock with Protection – test case


Started on July 10th 2020. BX stock price @ $53.60. Ended on November 13th 2020. BX stock price @ $56.16


Stock price range during the period was $50.65 low, $59.10 high. Trading within that channel saw a couple of strong up and downtrends (more rolling than I expected).

Opening transaction: Buy 1x Dec 18, 2019; 40 Call (cost $15.75) / 55 Put (cost $6.45) Long Strangle Stock Replacement + Put protection, debit cost $22.20.

Close out transaction was a credit of $17.40 ($15.64 calls, $1.76 puts) – so the Puts suffered more from time decay and a lower VIX (my assumption).


Over the period 49 Buy/Sell (split 50% Buy / 50% Put) transactions made with a net final total profit of $0.76 per contract (10 contracts = $760).


Strategy was selling 1x weekly calls and 0.5x weekly puts – rolling as required.

In this case, Buy and Hold w/o protection would have been a more profitable strategy.

A couple of takeaways, and it is relevant for a #sleepatnight strategy.

  1. DITM Collar trades pay off more to the downside (the combined short deltas of short calls + long puts) so great for an averaging down strategy.
  2. Overcoming time decay on the long puts is a challenge and a balancing act, particularly in a period of rapid stock price appreciation as one has to deal with both short calls and long puts being challenged.
  3. Depending on risk tolerance careful analysis is needed on the strike prices of the short calls and long puts in a collar trade.

#sleepatnight

TDOC BWB

TDOC currently trading @ $185

BTO TDOC Dec 04, 192.5 / 185.0 / 172.5 Broken Wing Put Butterfly @ $0.78 credit.

No risk to the upside (keep the credit) – downside breakeven $177.

#BWB 

RH BWB – add layer (not)

Yesterday: ‘A tingle of greed urges me to capitalize where $400 could be an obvious resistance level. 52 week high was $410. Earnings are on 12/03. So:

STO RH Nov 20, 420 / 430 Bear Call Spread for $2.20.

Started with 1 contract, ready to scale up if RH momentum continues’.

Today: RH moves rapidly to $420. I mean there’s momentum and there’s momentum. Moving out of the way of the freight train, so closed out the 1 contract for a debit of $5.30. Call it stop loss trigger.

RH BWB – add layer

RH was trading @ $359 when I opened the Nov 20, 370 / 360 / 340 Broken Wing Put Butterfly @ $3.15 credit. RH has now moved up to around $400 (that’s good for the BWB). A tingle of greed urges me to capitalize where $400 could be an obvious resistance level. 52 week high was $410. Earnings are on 12/03. So:

STO RH Nov 20, 420 / 430 Bear Call Spread for $2.20.

Started with 1 contract, ready to scale up if RH momentum continues.

COST – Unbalanced Condor

COST @ $384

BTO 1 x COST Nov 20: $385 /$380 long PUT Vertical @ $ 2.45 debit
STO 2 x COST Nov 20: $375 / $370 short PUT Vertical @ $1.22 credit (x 2)

Total debit of $0.01 for the unbalanced Condor. Downside breakeven is around $372. No risk to the upside.

TSM BWB

Closing out a Nov 20 95 / 90 / 80 Put Broken Wing Butterfly for a credit of $1.05. BTO on Oct 08 for a credit of $1.09. (total credit for the trade $2.14).

SPX New diagonal

Taking a leaf out of Iceman’s playbook:


Bought to open 5 SPX Mar 19 2021 3700 Call / Sold to open 5 SPX Nov 20 2020 3525 Call @ 27.25 Debit.

The short 3525 Nov calls roll to the Mar 19 3700 calls for a $30 credit.

IBM

I’m long IBM and think the recent beating it has taken is rather overdone.

Sold IBM 1 x 3 x 2 Nov 13 2020: 110 / 115 / 120 Call Unbalanced Butterfly @ 0.32 debit.

This is a punt where I am willing to take on the task of managing a short 2 x 115 / 120 call spread, especially as that means I pocket 5 points from the 110 / 115 long call spread.

Limited downside risk (cost of the debit). Upside breakeven point @ $117.

#UnbalancedButterfly

BABA BWB

BABA currently trading @ $311

BTO BABA Nov 20, 322.5 / 312.5 / 292.5 Broken Wing Put Butterfly @ $2.26 credit.

No risk to the upside (keep the credit) – downside breakeven $297.

Standard adjustment if short strike is breached – roll down and out the $312.5 / 292.5 Bull Put spread for as low a debit as possible. Hold on to the Long $322.5 / 312.5 spread pocketing $10. Timing is key to avoid whipsaw.

#BWB 

RH BWB

RH currently trading @ $359

BTO RH Nov 20, 370 / 360 / 340 Broken Wing Put Butterfly @ $3.15 credit

No risk to the upside (keep the credit) – downside breakeven $347.

Working on the premise that everyone staying at home during lockdown leads to strong dissatisfaction with their interior decor.

#BWB 

SPXL Leap Diagonal

BTO SPXL (3 x SPY ETF) Apr 2021 50 Call ($17.30) / Jan 2023 40 Call ($29.40) Diagonal @ $12.10 (selling the shorter term, buying the longer term) – a $10 spread with good rolling opportunities.

I know most of the trade ideas here are for short to mid term time frames – I thought I’d share a longer term bullish trade that should be relatively easy to manage. As SPY is going to the moon I thought I’d go along for the ride.

I’m cognizant of the fact the theta decay could be huge, but over the longer term expecting it to roughly track 3 x the performance of the S&P 500.

TSM BWB

BTO TSM Nov 20, 95 / 90 / 80 Broken Wing Put Butterfly @ $1.09 credit

#BWB 

ROKU BWB adjustments

Original trade: BTO Oct 16, 175 / 185 / 200 Broken Wing Call Butterfly for $0.07 debit.

Adjustment 1: Rolled the short Oct 16 185 / 200 leg to the Oct 23, 200 /215 short call spread. With ROKU on a charge need to go to the next adjustment.

Adjustment 2: Rolled the short Oct 23, 200 /215 short call spread to Nov 20, 215 / 230.

Adjustment 3: STC Oct 16, 175 /185 long call spread @ $9.83 (not sticking around for those remaining $0.17).

With ROKU still moving on up need to go to the next adjustment.

Adjustment 4: Roll the short Nov 20, 215 / 230 to Jan 21, 245 / 260 @ $2.00

So banked $9.83 from the sale of the long call spread of the BWB, and paid $2.00 (plus the original roll cost) to roll out the short leg to Jan 21. All in the name of providing a cover to the core trade which is the Jan 22, 140 / 190.

Big question is when to offset the short call spread with the short put spread? Pulling the trigger on that side of the strategy normally causes the trading gods to engineer a rapid downward move.

#BWB 

ROKU BWB

Since many months sitting on a ROKU Jan 2022, $140 / $190 Bull Call Spread (cost $13). Looking for ways to sell premium against that spread, this BWB does the trick with the $175 / $185 leg of the BWB 100% ITM, happy to keep rolling the short call spread side $185 / $200 as often as it takes.

$ROKU BTO Oct 16, 175 / 185 / 200 Broken Wing Call Butterfly for $0.07 debit.

Breakeven on the upside at $185. $0.07 of downside exposure.

#BWB 

BA BWB

$BA BTO Oct 16, 160 / 165 / 175 Broken Wing Call Butterfly for $1.11 credit.

Breakeven on the upside at $171. No downside risk (keep credit).

#BWB 

FB Batman BWB

$FB BTO Oct 16, 245 / 255 / 270 Broken Wing Call Butterfly for 0.53 debit.

$FB BTO Oct 16, 250 / 240 / 225 Broken Wing Put Butterfly for 0.30 debit.

Upside / Downside Breakeven at $264 / $231.

#BWB 

EWZ extension

I love the issuance of new LEAPs. The process of price discovery is in its infancy, and nobody quite understands fair value (I certainly don’t!). An EWZ ATM 7 DTE straddle (my selling vehicle du jour) can generally be sold for roughly $1.25.

If I look at my current asset to sell straddles against – the Jan 2022 $27 call / $37 put strangle which cost $16.70, I just closed that out for $16.10 and then BTO the Jan 2023 same strike strangle @ $18.75.

So I get 52 weeks additional selling opportunities at around $1.00 (being conservative) for an extra $2.65. That seems to imply that 3 winning weeks of straddle sales pays for the strangle extension.

Maybe XMAS does come early?

PYPL UNH BWB

$PYPL BTO Oct 02, 190 / 185 / 175 Broken Wing Put Butterfly for 0.69 credit.

Breakeven on the downside at exp $179. No upside risk (keep credit).

$UNH BTO Oct 02, 315 / 310 / 300 Broken Wing Put Butterfly for 1.01 credit.

Breakeven on the downside at exp $304. No upside risk (keep credit).

#BWB 

SPX Iron Condor

Sold $SPX Sep 21: 3260 / 3280 – 3500 / 3520 Iron Condor @ $5.15

Call it Fat Finger Freud – I meant to sell the October 02 strikes! I was thinking of the SPX calendars I was in the process of selling using the Sep 21 strikes. But hey, “The best laid schemes o’ mice an’ men / Gang aft a-gley.”

#IronCondor

SPX calendar

Sell Sep 21 / Oct 05 $3400 SPX call calendar @ $26.45 debit.

ABBV – Oven Baked Election Proof

#sleepatnight

BTO ABBV stock @ $92.19 
STO ABBV Nov: 90 call @ $5.25

BTO ABBV Jun 2022: 120 put : @ $38.42

ABBV pays a $4.72 per share dividend (5.1% yield).

For the $120 protective put you are paying (92.19 + 38.42) – 120 = $10.51 premium. The first call sale ($5.25) pays off 50% of that premium.

EWZ

#DiagonalButterfly

BTC EWZ Sep 04 $30.5 call @ $1.01 (sold for $0.89);

0.5 x EWZ Sep 04 $30.5 put expired worthless (sold for @ $0.51)

0.5 x EWZ Sep 04 $30.0 put expired worthless (sold for @ $0.58)

STO EWZ Sep 11 $31 straddle @ $1.65

Cover is EWZ Jan 2022 long strangle $27 call / $37 put – which is showing a small profit.

IBB

#DiagonalButterfly

IBB @ $129.28

BTC Sep 04: $133 straddle for $5.63 (originally sold for $3.94).

STO Sep 11: $130 call @ $1.15

STO Oct 02 : $130 put @ $5.73

Cover is IBB Jan 2022 : long strangle $115 call / $150 put @ $53.74

MSFT

Sold MSFT 1 x 3 x 2 SEP 25 2020: 230 / 225 / 220 PUT Unbalanced Butterfly @ 1.35 credit.

No risk to the upside. Downside breakeven point @ $222.

Adjustment plan when (if) MSFT goes lower, close out the 1 x 230 / 225 put spread for a credit, add a 2 x upside call credit spread to match the leftover 225 / 220 put spread, creating an Iron Condor.

#UnbalancedButterfly

SEDG scalping

#UnbalancedButterfly Original trade was STO SEDG 1 x 3 x 2 SEP 18 2020: 210 / 200 / 190 Unbalanced Put Butterfly @ $2.68 credit.

SEDG is currently @ $220. Looking to take off the 1 x 210 / 200 long put spread, and then layer on a Bear Call spread to create an Unbalanced Iron Condor (1 x 200 / 210 : 2 x 230 / 240).

STC SEDG 1 x SEP 28, $210 / $200 long Bull put spread @ $2.90

STO SEDG 1 x SEP 28, $240/ $230 Bear Call spread @ $2.90 (yes, same prices)

Total credit received so far ($2.68 + $2.90 + $2.90) is $8.48.

Original trade link: https://wp.me/p6Nxuc-jFO

BA

#CallsInsteadOfStock

BA @ $171.90

BTO BA Dec 18 $160 / $190 Long Call Vertical @ $12.20 (position $11.90 ITM at kick-off)

STO BA Sep 18 $165/$160 Bull Put Spread @ $1.79 (half sale).

PFE

#CoveredStrangle

BTO PFE @ $37.73

STO Oct 02; $35 / $40 strangle @ $0.73

Happy to double down @ $35 and then sell calls.

WSM

Been sitting on a Sep 18 $100/$110 call credit spread sold for $2.14 credit, waiting patiently to fill the put credit spread when(if) WSM pulls back after its insane run up since March (3x) and latterly into earnings. The tyres were kicked last night and found wanting – just the opportunity to take the Sep 18 $85/$75 put credit spread sold for $1.14 – so credit of $3.28 for the Iron Condor.

#ironcondor

IBB – Parking Cash

#DiagonalButterfly

BTO IBB Jan 2022 : long strangle $115 call / $150 put @ $53.74
STO IBB Aug 28: $133 straddle @ $5.34

Excess premium bought $53.74 – $35 = $18.74, so hunting down that amount through straddle / strangle sales until Jan 2022. I setup the original trade on 18 August.

With IBB hovering around the $133 strike and 2 DTE, thought I’d drive the rolling process, rather than be driven – so rolled early:

BTC Aug 28: $133 straddle @ $2.30 (originally sold for $5.34)

STO Sep 04: $133 straddle for $3.94.

Credit generation campaign

Short term straddle/strangle trades for cost reduction purposes on the corresponding long dated long strangles:

0.5 x EWZ Aug 28: $30 short straddle @ $1.20

0.5 x EWZ Aug 28: $29.5 / 30.5 short strangle @ $0.77 (is the $0.43 cushion versus the straddle sale any comfort?).

XLF Sep 04 $24.5 short straddle @ $0.90 – giving myself more time to adjust.

XLU Sep 04 $60 short straddle @ $1.53

Market makers playing hard to fill for the MDLZ strangle so I am closing that out and replacing with an IBB LEAP strangle.

SPX Risk Reversal

  • a la RandomWalk (but not sure whether the name fits this type of trade!)

Combine a close to the money Broken Wing Put Butterfly (debit trade) with an OTM unbalanced 1 x 3 x 2 Call Butterfly (credit trade) adjusting the strikes of the two trades to place it for as close to zero cost as possible.

Sept 21 weeklies: 3420 / 3400 / 3385 Put Butterfly @ $2.55 debit

Sept 21 weeklies: 3500 / 3510 / 3520 unbalanced Call Butterfly (1 x 3 x 2) @ $2.39 credit

Only risk to the downside is the debit paid ($0.16). Upside breakeven is around 3514. Two profit peaks (bigger one @ $3400, smaller one close to $3500.

But it makes more sense looking at the risk profile:

#riskreversal

XLK

#DiagonalButterfly

XLK @ $118.18

BTC $XLK Aug 21: $110 short straddle @$7.65 (originally sold @ $6.70)

Scaled into additional LEAP strangles earlier in the month, so layered on additional short terms straddle sales

BTC $XLK Aug 21: $115 straddle @$2.65 (originally sold for $4.41).

This turned the Aug 21 set of straddle sales into a profit.

STO $XLK Aug 28: $117.5 straddle @$2.94

Cover is the Jan 22: $90 call / $125 put long strangle @ $50

MDLZ

#DiagonalButterfly

MDLZ @ $57.47

BTC MDLZ Aug 21 $56.0 short straddle @ $1.70 (originally sold for $1.03)

Assess on Monday, but planning to move to strangle rather than straddles sales and 14 DTE.

Cover is the Jan 2022 long $40 put / $65 call strangle.

XLF vs. FAS

XLF @ $24.36

BTC XLF Aug 21 $25 short straddle @ $0.68 (originally sold for $1.02)

Cover is the Jan 2022 15 PUT / 30 CALL long strangle @ $ 1.56

New set of straddles for XLF to be sold on Monday.

FAS @ $36.38

BTC FAS Aug 21 $40 short straddle @ $3.70 (originally sold for $3.34)

STO FAS Sep 04 $36 short straddle @ $3.29

Cover is the FAS Jan 2022 20 PUT / 70 CALL long strangle @ $ 10.28

It’s early days but I’m expecting FAS volatility to be too high for this strategy. I’ve already moved to selling 14DTE for FAS, the next modification will be selling strangles rather than straddles.

#DiagonalButterfly

EWZ

#DiagonalButterfly

BTC EWZ Aug 21 $31.5 straddle @ $1.96 (sold for $1.48)

With last Monday’s sharp decline on EWZ I used the opportunity to add to my long LEAP strangles and then made a corresponding weekly straddle sale at the lower ATM strike ($30) – this turned the combined set of weekly sales into a profit:

BTC  EWZ Aug 21 $30 straddle for $0.49 @ (sold for $1.29)

Cover is EWZ Jan 2022 long strangle $27 call / $37 put.

Gut feeling told me to hold off from selling the new set of weekly straddles until I see how the market unfolds on Monday.

KLAC

#IronCondor – BTC KLAC SEP 18, 2020: 230 / 220 – 175 /165 Iron Condor @ $2.15 (originally sold for $3.78). Worth it for the 10 day holding period.

 

NVDA closed

#Earnings BTC $NVDA 455/460-525/530 iron condors for $0.15. Sold yesterday for 1.75.

This was my first Jeff follow. Now I’m a Believer.

IRBT BWB

 $IRBT STC Aug 21, 80 / 75 / 65 Broken Wing Put Butterfly for $2.55 credit (trade entered for a $0.78 credit), so $0.78 credit on the way in and + $2.55 credit on the way out making for a total gain of $3.33.

Although IRBT was approaching max profit on the trade, expiring this Friday, humility for once urged me to take the profits now.

Original entry with comments

MDLZ

#DiagonalButterfly

BTC MDLZ Aug 14 $55.0 short straddle @ $1.20 (originally sold for $1.21)
STO MDLZ Aug 21 $56.0 short straddle @ $1.03

I’ve noticed that the bid/ask spread on the calls is outrageous and very difficult to get filled without giving up too much. If this continues I will shut down this particular set.

Cover is the Jan 2022 long $40 put / $65 call strangle.

EWZ

#DiagonalButterfly

BTC EWZ Aug 14 $31.5 straddle @ $0.58 (sold for $1.46)

STO EWZ Aug 21 $31.5 straddle @ $1.48

Cover is EWZ Jan 2022 long strangle $27 call / $37 put

LRCX – Unbalanced Condor

LRCX @ $376

BTO 1 x LRCX Aug 21: $375 /$370 long PUT Vertical @ $ 2.60 debit
STO 2 x LRCX Aug 21: $360 / $355 short PUT Vertical @ $1.27 credit (x 2)

Total debit of $0.05 for the unbalanced Condor. Downside breakeven is around $358. No risk to the upside (just the $0.05 cost of the trade).

If LRCX starts imploding then throw on a long PUT diagonal (e.g. -1 Aug 21 $355 / +1 Aug 28 $355) at around $2, which drops the downside breakeven to $346.

Risk/Reward extremely enticing.

#UnbalancedCondor

XLF vs. FAS

XLF @ $25.70

BTO XLF Jan 2022 15 PUT / 30 CALL long strangle @ $ 1.56 to be financed by the selling of weekly straddles/strangles:
STO XLF Aug 21 $25 short straddle @ $1.02

FAS @ $39.93

BTO FAS Jan 2022 20 PUT / 70 CALL long strangle @ $ 10.28
STO FAS Aug 21 $40 short straddle @ $3.34

It’s kind of like an alternative Pairs trade – I’m pitting XLF against FAS (the 3X long financial ETF). Whichever one is easier to manage in relation to the returns that can be had gets more funds. The other gets cut loose.

Based on the opening trades either I have gone mad or the market makers have gone crazy (and I know the MMs never go crazy!). That relative premium between the core position and the short term sales is outrageous.

#DiagonalButterfly

KLAC

#IronCondor – Sold KLAC SEP 18 2020 230 / 220 – 175 /165 Iron Condor @ $3.78. KLAC currently trading @ $203.

SEDG

#UnbalancedButterfly – Sold SEDG 1 x 3 x 2 SEP 18 2020 210 / 200 / 190 Unbalanced Put Butterfly @ 2.68 credit.

A starter position on the basis I will be wrong until proven otherwise, whereupon I will add to the position.

It’s useful to look at the Unbalanced Butterfly as the combination of a 1 x long put spread and a 2 x short put spread.

Adjustments down the road: all the risk is to the downside. If SEDG drops below $200 then I cash out the long put spread and use those funds to roll the 2 x short put spread down and out.

MDLZ

#DiagonalButterfly

BTC MDLZ Aug 07 $55.0 short straddle @ $0.66 (originally sold for $1.18)
STO MDLZ Aug 14: $55.0 short straddle @ $1.21

Option Gods teaching me the meaning of gamma with these weekly straddle sales!

Cover is the Jan 2022 long $40 put / $65 call strangle.

EWZ

#DiagonalButterfly

BTC EWZ Aug 07 $32 straddle @ 0.77 (sold for $1.38)

STO EWZ Aug 14 $31.5 straddle @ $1.46

Cover is EWZ Jan 2022 long strangle $27 call / $37 put

EIX – Parking More Cash

#suecollar #sleepatnight

BTO EIX stock @ $53.54 
STO EIX Sep 18: 52.5 call @ $3.40

BTO EIX Jan 2022: 70 put : @ $21.76

EIX (Edison International) currently pays a $2.55 per share dividend (4.7% yield).

For the $70 protective put you are paying (53.54 + 21.76) – 70 = $5.30 premium. That first call sale goes a long way on the cost reduction process.

Thanks Sue (and many others) for all the ideas on conservative trades that can generate a reasonable income with upfront protection.