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As of this moment after all commissions I have taken in exactly $12,733. I am short 6 of the weekly 205/220 strangle - using the Last for the price that strangle is trading for $4.13 so it would cost $2478 to get flat, so I figure a current net profit of $10,255. If I just get a little bit of luck (decrease volatility and a little bounce in the market) hopefully I can keep the entire $12,733 by Friday.

Right now with 6 strangles the BP effect is about $17,000. This trade started out with selling 5 strangles, and eventually by the time it reached the peak of 50 strangles the BP reduction was something like $180,000 - which is a bit more risk than I should have taken. I'm not even sure how I let the position get that big so that part of my trade management was not so good.

This started out as an earnings trade with my assumption that the stock would stay within a range of twice the expected move - which did not happen. Then my assumption was that after such a strong move the predominant trend would be higher toward the 230-240 range, which also turned out to be wrong with the stock now under $210 and below my original upper price of $215 when I first put on this strangle before earnings. So the good part is that even though the stock made this crazy move and even though most of my assumptions turned out to be wrong, I was able to adjust the position and turn a big loser into a profitable trade, so that has been a valuable experience. Now I just need to figure out a way to salvage my bond position...

Made one adjustment today in order to try to stay delta neutral. Rolled the 205 Put up to 210 for credit $1.08 - which got the delta down from around 300 to 19. Position is now:

Finally put an end to this trade. Bought back the 6 strangles for $2.05 since AMZN is trading near the midpoint of both strikes. Will post the final results of everything tomorrow after the data is downloaded to Excel.

So on the 44 that you are out of now what was the net profit/loss?

ReplyDeleteAs of this moment after all commissions I have taken in exactly $12,733. I am short 6 of the weekly 205/220 strangle - using the Last for the price that strangle is trading for $4.13 so it would cost $2478 to get flat, so I figure a current net profit of $10,255. If I just get a little bit of luck (decrease volatility and a little bounce in the market) hopefully I can keep the entire $12,733 by Friday.

ReplyDeleteWow, good job. What was the amount of capital required to trade that position?

ReplyDeleteRight now with 6 strangles the BP effect is about $17,000. This trade started out with selling 5 strangles, and eventually by the time it reached the peak of 50 strangles the BP reduction was something like $180,000 - which is a bit more risk than I should have taken. I'm not even sure how I let the position get that big so that part of my trade management was not so good.

ReplyDeleteThis started out as an earnings trade with my assumption that the stock would stay within a range of twice the expected move - which did not happen. Then my assumption was that after such a strong move the predominant trend would be higher toward the 230-240 range, which also turned out to be wrong with the stock now under $210 and below my original upper price of $215 when I first put on this strangle before earnings. So the good part is that even though the stock made this crazy move and even though most of my assumptions turned out to be wrong, I was able to adjust the position and turn a big loser into a profitable trade, so that has been a valuable experience. Now I just need to figure out a way to salvage my bond position...

Made one adjustment today in order to try to stay delta neutral. Rolled the 205 Put up to 210 for credit $1.08 - which got the delta down from around 300 to 19. Position is now:

ReplyDelete-6 June2 210 Put

-6 June2 220 Call

Finally put an end to this trade. Bought back the 6 strangles for $2.05 since AMZN is trading near the midpoint of both strikes. Will post the final results of everything tomorrow after the data is downloaded to Excel.

ReplyDeleteHere are the final results:

ReplyDeleteNet profit after commissions = $12,133

TD should be happy - all of these trades generated $1516 of commissions for them even though I have a good rate.