Rationale:
-reported earnings a couple days ago and price traded down significantly so IVR still elevated
-portfolio needed some short delta for June expiration
-looked at a variety of strategies:
strangle was a good option but was looking for defined risk position
straddle: almost went with the 50 straddle, but that strat is undefined and the spread was trading for exactly 10% os stock price (so not enough edge)
settled on unbalanced butterfly that has no risk to the downside
-comfortable with this position b/c when a stock isnt bought up the day or 2 after earnings they can trend down to flat for a couple weeks (e.g. KHC naked short put trade)
IVR=69% (42% for June Expiry)
IV/HV=130%
Potential ROC=560/440=127%
Key corporate events (earnings, dividend, investor day, etc.)=No
How much risk should/did I take? $440 or 2% of NLV; appropriate risk (since IVR is 69%, may be able to get more aggressive when IVR is high)
Trade Planning
-structure: unbalanced butterfly
-major support: 43.33
-major resistance: 54.08, 59.6
-add point: NA
-stop loss: $200
-take profit price / risk-reduction plan: will likely hold into expiration; can consider taking one off if price is under tent near expiration
2019-06-20 19:03:28
-took trade off today after it made a strong move towards upside break-even point
-once again had an opportunity to take the trade off when price was right under the tent,
-can't take trades this close to expiration
-one thing unique about this butterfly trade is I was short bias (no risk to downside), but still profited even though the stock made strong move to upside recently
Execution detail:
Date/time | Symbol | Side | Price | Position |
---|---|---|---|---|
2019-05-13 12:19:38 | JUN21 19 47.5 PUT | buy | $1.390 | long |
2019-05-13 12:19:38 | JUN21 19 50 PUT | sell | $2.295 | short |
2019-05-13 12:19:38 | JUN21 19 55 PUT | buy | $5.380 | long |
2019-06-20 15:45:08 | JUN21 19 47.5 PUT | sell | $0.0300 | 0 |
2019-06-20 15:45:08 | JUN21 19 50 PUT | buy | $0.0600 | 0 |
2019-06-20 15:45:08 | JUN21 19 55 PUT | sell | $3.040 | 0 |
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