Opening (IRA): SPY October 14th 352/December 16th 409 LPD*
Actualizado
... for a 43.10 debit.
Comments: Short delta hedge against a long delta portfolio; buying the back expiry 90 delta, and selling the front expiry 30. 43.10 cost basis on a 57 wide with a 365.90 break even, a 13.90 ($1390) max, and a 6.95 50% max.
Will look to take profit at 50% max, which would be for a 50.05 credit and/or roll out the short put to reduce cost basis if the setup doesn't hit take profit by the time the short put runs out of road.
* -- Long put diagonal.
Comments: Short delta hedge against a long delta portfolio; buying the back expiry 90 delta, and selling the front expiry 30. 43.10 cost basis on a 57 wide with a 365.90 break even, a 13.90 ($1390) max, and a 6.95 50% max.
Will look to take profit at 50% max, which would be for a 50.05 credit and/or roll out the short put to reduce cost basis if the setup doesn't hit take profit by the time the short put runs out of road.
* -- Long put diagonal.
Nota
Just a comment here on little tweaks I made to these. First, stick with relatively short duration with the front expiry. A 7-14 day 30 delta will be closer to current price than a longer dated one, so the setup will be more amenable to max profit because the underlying has less ground to cover to get to max. Second, set a GTC order to take profit right after you get filled. This has been a whippy market, and you may get a fill if the setup is close to your take profit, and we experience a little whip into the put side. Third, in considering whether you should roll out the short put for cost basis reduction, look at the value of your long. If its value is at or greater than your take profit, don't roll. Leave it alone to allow the extrinsic in the short to decay out. For example, my take profit on this is 50.05 with the 409 long marking at 51.09 to finish the day (i.e., greater than my take profit), so I would leave it alone rather than roll out. (How the 50% max TP is calculated: the width of the spread (57.00) minus the debit paid (43.10) equals 13.90. 50% of 13.90 is 6.95. 6.95 plus what I paid (43.10) is 50.05.). Lastly, when you roll out the short put for a credit, subtract the credit received from your original profit target (e.g., if I rolled for 1.00, my cost basis would now be 42.10, but my take profit would remain the same at 6.95 profit. 6.95 + 42.10 = 49.05, instead of the original 50.05).Operación activa
Rolled the October 14th 352 to the October 21st 352 for a .99 credit. Cost basis now 42.11 on a 57 wide with a 366.89 break even.Operación cerrada: objetivo alcanzado
I had a GTC order to close for 49.06, but got filled at the open for 52.09. 9.98 ($998) profit. Will look to re-erect this in Friday's session ... .
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