While I wait for my "gaggle" of long VIX/VIX derivative setups to play out, I'm going to play a few of these smaller earnings announcements, so that I can keep powder dry for the juicier underlyings (should their implied volatility ever ramp up to my standards).
Metrics:
Probability of Profit: 77%
Max Profit: $79/contract
Buying Power Effect/Underfined: ~$187/contract; Undefined Risk
Look to take it off for 50% max profit ... .
Metrics:
Probability of Profit: 77%
Max Profit: $79/contract
Buying Power Effect/Underfined: ~$187/contract; Undefined Risk
Look to take it off for 50% max profit ... .
Comment:
Post announcement: price tanked, but is holding in there above my short put strike.
Trade closed manually:
Out of the call side for $3 (near worthless). The call was sold for $47/contract, so that locks in a $44/contract profit. Currently, price is wandering around slightly below the 15 put, but there is still some time for it to work out, so I'll leave it alone here.
Comment:
With price meandering south of my short put, I'm probably going to roll this out another week "as is" to give it additional time to work out and sell a short call in the same expiry against.
Comment:
Rolled the 15 short put out to May 27th for a $31 credit and matched it up with a 15.5 short call in the same expiry for a $29 credit. I received $79 in credit for the original setup, closed out the short call for a $3 debit, and received $31 for the roll and $29 for the 15.5 short call, so I've received a net of $136 in credit/contract. Ordinarily, I look to take these "broken plays" off for scratch, but I'm going to take off the current setup for what I was originally shooting for -- 50% max profit of the $79 in credit I received for the original setup or about $40/contract in profit. Consequently, I'll put in a GTC order to cover the current strangle for a $95 debit ($136-$95=$41).
Trade closed manually:
Closed for a $97 debit, which is "close enough" for this broken setup. Net profit was $136 - $97 = $39/contract.