Long Box Spread as a Diagional

[OptionGuru]

Call it what you want but the short position is neutral and the long position very bullish. Having them both opened at the same time makes no sense.

long position very bullish should read: long position very bullish/bearish

 

[destriero]

Long Positions
IWM Mar 17 2017 109.00 Call @ $7.63
IWM Mar 17 2017 109.00 Put @ $9.12

Short Positions
IWM Apr 22 2016 110.00 Cal @ $1.52
Iwm Apr 22 2016 108.50 Put @ $1.97

Intent is to roll the short positions as close to expiration as feasible and close the whole position when the Long contracts are 6 month from expiration.

Thank you

It's termed, a "roll" or "jelly roll"

 

[ironchef]

Call it what you want but the short position is neutral and the long position very bullish. Having them both opened at the same time makes no sense.

Can you kindly explain?

Looks to me he shorted a near term strangle and longed a far term straddle. Perhaps he tried to partly pay for the long with a short with the judgement that short term things are not going to move that much but very bullish/bearish long term?

 

[OptionGuru]

Can you kindly explain?

Looks to me he shorted a near term strangle and longed a far term straddle. Perhaps he tried to partly pay for the long with a short with the judgement that short term things are not going to move that much but very bullish/bearish long term?

Trade the short position first:

• Short
  
• IWM Apr 22 2016 110.00 Cal @ $1.52
• IWM Apr 22 2016 108.50 Put @ $1.97

Close the above position around April 22, 2016 and open the long position at a slightly lower cost than the quotes below:

• Long
• IWM Mar 17 2017 109.00 Call @ $7.63
• IWM Mar 17 2017 109.00 Put @ $9.12

 

[donnap]

AKA Baghdad Suicide Bomber, um, Spread Thingy

If the front strangles remains OTM for a while it looks OK. Slippage should be considered as an additional cost. If either option in the short strangle goes ITM = more slippage.

Gamma gonna get ya if either short option moves DITM.

If short call gets ITM = potential early exercise before ex-div.

The combos are redundant. A simple diagonal, could have the same R/R.

It could be a choppy year and the thing works great. But at least as likely, the long straddle gains delta one way or the other and selling premium may start to become a bit one-sided anyways.

@106 the short side is about 4.25 long side 17.25 mid. Little volume.

As far as my experience with ratio diagonals, I like the strat in low IV and skew plays.