TRADE IDEA: XOP OCT 21ST 30/35/35/40 IRON FLY

Mostly hand-sitting here, but figured I'd take advantage of the increased volatility in the petro sector by selling a bit of premium in XOP, since its IV has popped here.

Metrics:

Probability of Profit: 52%
Max Profit: 2.46 ($256)/contract
Max Loss: 2.54 ($254)/contract
Break Evens: 37.46/32.54

Notes: I'll look to take this off at 25% max profit ... .

Comment:

Chased price slightly just to get a fill (places to go, peeps to see, yada yada). Filled for 2.42 ($242) credit/contract. Entered a GTC order to take profit at 25%.

Comment:

Post OPEC jibber-jabber, oil has ripped up and so has this ETF. Here, I'm waiting for the short put side to approach worthless before pulling it off and rolling out the call side. Until then, I'll do nothing ... .

Comment:

Closing out the near worthless short put side for a .03 debit (frankly surprised that I could close out the whole side; the long put looked "no bid" to me). Rolling the Oct 21st 35/40 call spread to the Nov 18th 36/41 for a .89 db and selling a Nov 18th 33/38 short put vert for a .94 cr so that I'm net credit on the roll. My "scratch point" on this setup is the credit I received for original fly (2.42) minus the .03 debit I paid to close out the short put side minus the .89 db I paid to roll the short call side plus the credit I received to sell the short put side against (.94) minus fees/comms (.06) or 2.42-.03-.89+.94-.06=2.38. My original price target for the whole setup was 25% of 2.42 or about .60 ($60) per contract. Since I'm still shooting for that, I'll look to take this rolled setup off at my current "scratch" point minus my original .60 TP or 2.42-.60=1.82.

Comment:

Think I'm going to revise my take profit to "scratch." Sometimes it's best just to get out of broken trades and reestablish rather than work them to profit, which ties up buying power ... .

Comment:

With 4 DTE left in my rolled setup, only $38 of extrinsic value left to take advantage of, and a scant $15 away from the scratch point, I'm looking to close this at NY open, rather than roll it out. I will look to close the short options first as a unit and then look at closing the longs (they may be "no bid", in which case I'll just let them expire worthless).

Trade closed manually:

As planned, closing out the straddle/inverted strangle portion of this rolled out setup. Covering for a 2.59 db. I have GTC orders to cover the long options for .05, but it is likely that they will just proceed to expire worthless; either one or both are no bid. I'll tally up the loss (~$30/contract) once the long options close out ... . Better a smaller loser than a bigger loser ... .

Comment:

In the end, a $36/contract loser (long options both expired worthless). Probably would have been a winner if I had rolled out an additional time, as luck would have it ... .