Long Calendar to Long Butterfly

J

justrading

I have a long calendar SPY 149 strike, short Feb 15 long Mar 15.

Did not close it at 22% profit as it's my first ever calendar and I was watching and waiting for reality to meet model, which it did not.

Now it's at a loss, I've learned the whys and wherefores so that's good. I can close it and lose beer money, or learn a bit more.

1) Close Feb and take the realised loss, leave Mar to ride as it's showing a nice profit and SPY seems on the up and up.

2) Use my Mar 15 149 as the ITM strike in a 149-153-157 'fly. The 149 cost me 2.57, it's now at 4.31 ask so I can put on the 'fly basically free. The other possibility is 149-152-155 but at current vol I think that's a bit narrow.

Anyone try this before? Opinions please.

Edit: Typo corrected.
 
Quote from froluis:

if not bearish for tomorrow I would close it.
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SPY has been on a steady uptrend, so no reason to be bearish unless there is a major selloff into today's close.

I reckon you are right about closing, did a bit more analysis and I think the 149 is not deep enough ITM to give a decent spread, so modeled probabilities of profit are fairly low.

Thanks.
 
Quote from justrading:

I have a long calendar SPY 149 strike, short Feb 15 long Mar 15.

Did not close it at 22% profit as it's my first ever calendar and I was watching and waiting for reality to meet model, which it did not.

Now it's at a loss, I've learned the whys and wherefores so that's good. I can close it and lose beer money, or learn a bit more.

1) Close Feb and take the realised loss, leave Mar to ride as it's showing a nice profit and SPY seems on the up and up.

2) Use my Mar 15 149 as the ITM strike in a 149-153-157 'fly. The 149 cost me 2.57, it's now at 4.31 ask so I can put on the 'fly basically free. The other possibility is 149-152-155 but at current vol I think that's a bit narrow.

Anyone try this before? Opinions please.

Edit: Typo corrected.
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or take delivery of underlying [short SPY] and collar it. Use weekly against monthly. Look for post-expiry and Valentines Day rally sell-off
 
Quote from newwurldmn:

Close your position. You don't have a clear view.
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Yeah, close it. You'll own the fly neutral to 53 and be kicking yourself when we drop. Don't extend duration as a method of repair. Obviously the "free fly" is at the expense of the Feb loss.

Perhaps you can wait for a drop of three or four points on the SPX before closing. You should get that tomorrow (from here).
 
i've made this mistake to many times.. don't "roll" and don't leg in and out of it.. and don't leg out of it into something else..

i hate the word roll.. because it really is nothing more then closing a position and opening another one...

most typically at least for myself.. when i'm in a trade that isn't going right i get obsessive about it.. and try to come up with wonderful ways to "repair" or amend..
 
Quote from atticus:

Yeah, close it. You'll own the fly neutral to 53 and be kicking yourself when we drop. Don't extend duration as a method of repair. Obviously the "free fly" is at the expense of the Feb loss.

Perhaps you can wait for a drop of three or four points on the SPX before closing. You should get that tomorrow (from here).
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You have a time machine? -5 right now
 
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