NaughtyPines

IBM IRON CONDOR (UPDATE ON BROKEN EARNINGS SETUP)

NYSE:IBM   INTERNATIONAL BUSINESS MACHINES CORP
This is becoming somewhat of an epic, post-earnings work-off setup.

Without boring you with all the details (which are outlined in the post below), my post-earnings setup, after rolling and such is currently a Dec             7 140/143/140/143 iron condor. The 140/143 is the put wing and, yes, the 140/143 is the call wing (so it's basically inverted, with the call wing below the put wing; in short, it's an f'd-up setup).

In any event, the 143 long call of that setup is nearly worthless, has done its job, so I'm going to take it off here for a .05 credit. The short call I will take off for as much I can get for it.

Thereafter, I will have to roll the put side, most likely no later than Tuesday of next week, since I don't see IBM             pounding above 143 (my short put strike) in short order. What I'm going to do is look to roll it out 45 DTE             , but I'm going to first see what I can get for a 1 SD             short call vertical at that expiry (it will be some kind of credit). Once I know what that credit is, I will look to see how much I can improve the short put side in terms of its strikes, because I don't want to pay more to roll/improve the short put side that I can receive in credit for the short call side.

The unfortunate thing is that a 45 DTE             will most likely be beyond IBM's next earnings announcement, so I will have to watch to see if I can take advantage of price movement/volatility around that event in order to improve the put strikes further ... .
Comment: On second thought, I'm going to take off the whole call wing now for a .27 debit; I'd kick myself if it decided to break to the upside a couple of bucks, which would be kind of close to my 140 short call ... . One less thing to monkey with come Tuesday, which is usually when I do housecleaning on setups nearing expiration.
Comment: This is what I'm going to attempt to do on Tuesday with this setup. Basically, I'm going to transition the setup to an iron fly by rolling out the short put spread to the Feb 19 expiry to a 125/135 (looking for a .50 credit). Then I'm going to pair that up with a short call spread, same expiry -- 135/145 (for which I'm looking for a 3.75 credit). The end result will be a 125/135/135/145 iron butterfly ... . Unfortunately, we will have an earnings announcement somewhere in there, but I'll deal with that when we get there; I hope it'll motivate some price movement that I'll be able to take advantage of ... .
Comment: Ultimately, with 3 DTE and trouble getting the butterfly I wanted filled, what I decided to do is a mild, chiropractic adjustment to the setup. So I rolled the short put side down to a 142/137 spread for a .30 credit and matched it with an oppositional call side -- a 145/150 for a .41 credit in the Jan 22nd expiry, which is shortly before earnings. It isn't great, since I only improved my short put strike by 1, but it beats treading water.
Comment: With 3 DTE, I've closed out the call side for a .16 debit, rolled out the 132/147 put side to the Feb 26th expiration for a .33 debit, and then matched up the put side with a short call vertical, a Feb 26th 137/142, for a .94 credit, so I'm net credit on the roll.

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