Noregrets' "Double or Nothing" Volatility Trading Journal
- Thread starter noregrets
- Start date
Long two overlapping Oct4 TSLA flies: the 155/175/195 in puts from 8.61, and the 175/195/215 in calls from 6.81. Looking for the stock to be somewhat rangebound the rest of this week between the two body strikes. Planning for a 3-day hold but will close early if it hits half of the initial thetas or I lose confidence in the trade.
Hat tip to riskattipruf for developing this overlapping fly strategy, with the flies sharing two strikes, that he terms a "fly box."
"It is not because things are difficult that we do not dare; it is because we do not dare that they are difficult." - Seneca
Hat tip to riskattipruf for developing this overlapping fly strategy, with the flies sharing two strikes, that he terms a "fly box."
"It is not because things are difficult that we do not dare; it is because we do not dare that they are difficult." - Seneca
Just curious - why did you trade this over the 155/175/195/215 condor? Is it so you can leg out of it over time?
Great to have you on the journal Soon, and good question. I think you hit on the key benefit for me, the added flexibility in managing the trade, as the p/l graphs are basically identical between the flies and the IC. I can take one of the flies or the other off, if the underlying starts to drift and my opinion on the trade merits it. I also used the flies to help evaluate the potential trade, looking at skew.
Went ahead and closed for a .60 gain (2x theta) in a day, helped by a healthy vola drop today in the stock. 3.1% return on risk inc. commissions. Given my exposure with this and the AMZN fly I decided to go ahead and harvest the gains. Executed by closing the IC at 3.92 and will hold the long box to expiry next week. Going forward I will probably just trade the IC in such a scenario, although for evaluation purposes I will continue to model the flies in skew.
Out at 18.07 for a 1.6% return on debit inc. commissions. This trade was just not performing to expectation. AMZN is significantly outperforming the broader market today while I am short delta, and for the three days I have had this on the position has been fighting a rising IV, exactly the opposite of what I expected and opposite of the general trend in other tech. It is likely that the trade would work out ok if I kept it on, but the profile is no longer favorable enough for me to enter it anew, so I'm out and on to better opportunities. And note to self: do the iron next time. I got a better entry on the call fly but exiting with the body strike ITM was painful.
One of my shortcomings that I am trying to improve on is to take profits more quickly on winning trades, and to cut off trades more quickly (even if in the green) when they aren't performing to my expectation. So it's definitely possible that I cut it off too soon, and as I noted I think it is likely that the trade will work out, but I am very happy with the decision. With that said, good luck on the fly! I hope it is a big winner for you. And thank you as always for the feedback and coaching.