NASDAQ:TUR   ISHARES INC MSCI TURKEY ETF USD DIS
Everyone's aware of the crisis in Turkey, I'm just here to play it.

Sold -1 Sep21 19/22 Big lizard for $3.06 cr .

Risk: 1x cr received
Profit: 25-30% of cr received


Breakevens: $15.94 to the downside, no upside risk.
Trade closed manually: Got a quick 10% move in this trade today. The underlying is incredibly ill-liquid (imagine that), but close here for a $2.78 db.

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Can u breakdown your terminology? Big lizard?

Also how can u gauge risk? What does 1z cr received and profit cr received? Thank you.
Reply
Benji Free_Joe
Hi @Free_Joe

A Big lizard is just selling a ATM straddle and then buying an upside call to cap the risk to the upside. If you are able to collect more credit from the straddle than the width between the straddle and long call, then you have no upside risk. You could even make money if you're wrong about the direction to the upside as well, because you've collected more than the width of the spread there (as in this example too).

In terms of risk, if I didn't want to hold shares of this underlying, I could just close the trade when it has reached 1x the credit received, or $612 in value. Since I collected $306 in credit, that would result in $306 in loss or 1x of the credit I received.

In terms of taking profit, TT has shown that optimal times to capture profits on straddles are around 25-30% of the max profit on these plays.
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@Benji, It turned out to be a "Hotel California" liquidity wise. Decently on the collapse; not so much thereafter ... .
Reply
Benji NaughtyPines
@NaughtyPines, Good observation. Maybe another example of "who cares what other people are trading?"
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