OPENING: SPY MARCH 29TH 273 LONG/MARCH 16TH 276 SHORT PUT
... for a .20/contract credit.
As a diagonal, there aren't many metrics to talk about, since outcome is almost wholly dependent on price action and how much you can get in credit on roll of the short aspect of the setup.
However, the setup was 9.18 delta long and had a positive theta metric of 3.09 on fill ... .
Here are the possible scenarios:
1) Price rips to the topside such that both the long and short aspects approach worthless. In that case, I probably just take home the paltry .20 in credit I collected at the door, and reset the setup if I'm still keen on working this type of setup.
2) Price stays largely where it's at with the short put going to worthless and the long put retaining a good deal of its value such that I can exit the short for near worthless and sell out of the long for a credit.
3) Price implodes through the short put's break even. In that case, I've got some work to do, which will generally involve rolling the short put down and out for a credit and potentially rolling the long down and out for a credit to give myself more time to work the short end of the stick (since I haven't given myself much time here between the long and short -- a scant two weeks).
I've set up a GTC order to take the entire diagonal off at a 1.39/contract credit which would result in a profit of 50% of the value of the long on fill (one-half of 3.17 is 1.59 minus what I got paid at the door .20).
And we'll see how it goes ... .
As a diagonal, there aren't many metrics to talk about, since outcome is almost wholly dependent on price action and how much you can get in credit on roll of the short aspect of the setup.
However, the setup was 9.18 delta long and had a positive theta metric of 3.09 on fill ... .
Here are the possible scenarios:
1) Price rips to the topside such that both the long and short aspects approach worthless. In that case, I probably just take home the paltry .20 in credit I collected at the door, and reset the setup if I'm still keen on working this type of setup.
2) Price stays largely where it's at with the short put going to worthless and the long put retaining a good deal of its value such that I can exit the short for near worthless and sell out of the long for a credit.
3) Price implodes through the short put's break even. In that case, I've got some work to do, which will generally involve rolling the short put down and out for a credit and potentially rolling the long down and out for a credit to give myself more time to work the short end of the stick (since I haven't given myself much time here between the long and short -- a scant two weeks).
I've set up a GTC order to take the entire diagonal off at a 1.39/contract credit which would result in a profit of 50% of the value of the long on fill (one-half of 3.17 is 1.59 minus what I got paid at the door .20).
And we'll see how it goes ... .
Trade active:
Although this spread appears to be "troubled," I'm waiting and watching two things: first, the amount of extrinsic left in the short (there's still quite a bit here (>1.50), even with 9 DTE), and second, the gross value of the long. I'll consider rolling out the short when most of the remaining extrinsic has bled out, which will probably be next week with around 4 DTE. Since the long has retained value in excess of my profit target, I don't need to consider doing anything with it yet (i.e., rolling out to slow theta decay and/or to give the setup more duration in order to continue rolling the short).
Trade active:
Rolled out the 276 short put to the March 23rd 276 on this weakness/IV pop, collecting an additional .51/contract in credit; scratch at .71/contract.
Trade closed manually:
With 14 DTE in the short leg and only 21 DTE in the long, and a market that has whipsawed over the past several weeks, I'm covering here for a .61/contract credit while I can (.10/contract profit).