Opening (IRA): SMH October 18th 220 Covered StraddleComments:
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).
