OPENING: OIH JUNE 16TH 24/27/27/28 BROKEN WING BUTTERFLY
A slight variation on a Super Bull (short put vertical financing a long put vertical; bullish assumption).
Metrics:
POP%: 71%
Max Profit: 1.12/contract
Max Loss/BPE: 1.88/contract
Break Even: 25.88
Notes: There are a couple of different ways to work this intratrade: (a) take the long put vert off in profit, leave the short put vert to ride; (b) the inverse of that; or (c) look to take it off as a unit. Here, I'll be shooting for 50% max and to take the entire thing off as a unit, but will also watch for opportunities. Filled for a .12 credit, by the way ... . Generally, this isn't my go-to instrument (XOP is more liquid), but I'm working a trade in XOP and don't want to step on that setup.
Metrics:
POP%: 71%
Max Profit: 1.12/contract
Max Loss/BPE: 1.88/contract
Break Even: 25.88
Notes: There are a couple of different ways to work this intratrade: (a) take the long put vert off in profit, leave the short put vert to ride; (b) the inverse of that; or (c) look to take it off as a unit. Here, I'll be shooting for 50% max and to take the entire thing off as a unit, but will also watch for opportunities. Filled for a .12 credit, by the way ... . Generally, this isn't my go-to instrument (XOP is more liquid), but I'm working a trade in XOP and don't want to step on that setup.
Trade active:
A couple of corrections are in order. The long put vert aspect of this setup is actually bearish, so a perfect finish would involve the 28 long put largely maintaining its value running into expiry, the 27 short puts losing their value, and the 24 long put also losing its value -- a fairly narrow "profit zone." These obviously need to be setup with a greater credit received on the front end ... . I haven't done many of these, so it's great that I got my "lesson learned" going small.
Trade closed manually:
Scratching this little fella out for an .11 db. Will reestablish a long petro play in XOP, my preferred instrument.