Opening (IRA): SMH October 18th 220 Covered Straddle
Updated
Comments:
Third highest 30-day IV (46.1%) on my options highly liquid ETF board behind BITO and TQQQ.
There are two different aspects to this trade, the first being the 220 monied covered call with the short call at the -75 delta. I had to route this as two separate trades and got filled for covered call aspect for a 213.35 debit.
The same strike short put is at the +21 delta strike, I got filled for a 5.05 credit.
Metrics:
Buying Power Effect: 428.30
Break Even: 213.35 for the covered call; 214.95 for the short put
Max Profit: 6.65 (for the monied covered call) + 5.05 (for the short put) = 11.70
ROC at Max: 2.73%
50% Max: 5.85
ROC at 50% Max: 1.37%
Generally speaking, I'll look to take profit at 50% max; otherwise, I'll look to roll out the short straddle as a unit to maintain net delta at or below +50 (100 delta for the shares, -75 for the short call, + 25 for the short put).
Third highest 30-day IV (46.1%) on my options highly liquid ETF board behind BITO and TQQQ.
There are two different aspects to this trade, the first being the 220 monied covered call with the short call at the -75 delta. I had to route this as two separate trades and got filled for covered call aspect for a 213.35 debit.
The same strike short put is at the +21 delta strike, I got filled for a 5.05 credit.
Metrics:
Buying Power Effect: 428.30
Break Even: 213.35 for the covered call; 214.95 for the short put
Max Profit: 6.65 (for the monied covered call) + 5.05 (for the short put) = 11.70
ROC at Max: 2.73%
50% Max: 5.85
ROC at 50% Max: 1.37%
Generally speaking, I'll look to take profit at 50% max; otherwise, I'll look to roll out the short straddle as a unit to maintain net delta at or below +50 (100 delta for the shares, -75 for the short call, + 25 for the short put).
Trade active
With the bearishly skewed short straddle in profit, rolling it down and out to the Nov 215 strike for a 7.42 credit. Break even is now 213.35 - 5.05 - 7.42 or 200.88/share.Trade active
With the bearishly skewed short straddle aspect again in decent profit, rolling it down and out to the Dec 210 strike for a 7.33 credit; 193.55 break even; 61.45 net delta.Trade active
Closed the bearishly skewed Dec 210 short straddle in profit for a 37.72 debit and sold the Dec 20th 220 call against my stock for a 17.50 credit; 213.77 break even. This frees up the BP occupied by the short put aspect and reduces net delta directionality of the position (since the Dec 20th 220 is at the 50 delta).Trade closed: target reached
50% max hit today on the remaining covered call aspect, closing today for a 216.89 credit. 6.23 ($623) net profit.
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