With the market running, I thought I would continue to add long delta on an ETF that is possibly catching up. This isn't a normal setup that I would do, but it still takes on one of the principles of premium selling, which is reducing cost basis.
Trade Setup:
+1 IYR Apr 21 76P/79P/81C Super Bull @ $0.01
DTE: 50
Max Win: Theoretically Undefined
Max Loss: $301
Breakeven: $81.01
Trade Management: The trade acts very interesting, as it will not make any money at expiration unless it is over $81.01. In the mean time, however, any expansion in volatility would help out my call (hinder the short put spread and possibly show a paper loss); and obviously a continued up move would benefit both sides of this trade. The only way for this trade to "lose" would be to trade and expire down below $79. My loss would be the difference between $79 minus closing price at expiration, down to $76. $79 - closing price = loss. I am going to monitor the trade closely, as it's fairly new and I'm trying to adapt to an up moving market, so my initial target for the spread is $200.
Green zone is profit potential; Vertical black bar is expiration.
Trade Setup:
+1 IYR Apr 21 76P/79P/81C Super Bull @ $0.01
DTE: 50
Max Win: Theoretically Undefined
Max Loss: $301
Breakeven: $81.01
Trade Management: The trade acts very interesting, as it will not make any money at expiration unless it is over $81.01. In the mean time, however, any expansion in volatility would help out my call (hinder the short put spread and possibly show a paper loss); and obviously a continued up move would benefit both sides of this trade. The only way for this trade to "lose" would be to trade and expire down below $79. My loss would be the difference between $79 minus closing price at expiration, down to $76. $79 - closing price = loss. I am going to monitor the trade closely, as it's fairly new and I'm trying to adapt to an up moving market, so my initial target for the spread is $200.
Green zone is profit potential; Vertical black bar is expiration.