Looking at the other fly broken wing in APPL at 133-134-136 (1:3:2) I took in an initial credit of 55 cents. If i roll down the 136-135 as the stock has moved lower from initial entry it would not cost much to balance it off keeping some of the initial credit and lowering the risk and gaining back some BP.If you buy the 21 22. Call spread,you RR shifts dramatically..
You woukd be in the 19/20/21
1x3x2....
I always buy in the embedded short verticals..at the right price
Open Interest Pinning and Butterflies
- Thread starter caroy
- Start date
If there's a bit of time left and that sucker trades for .05,I buy it in.You are spending .10 of your credit and shiting the R/R in your favor..i have the same spread ,but the next higher strike...
Adjusted the Apple position today buy rolling down the 135 calls to 134. Paid 12 cents total giving up some of the initial premium collected from 55 cents but now it is a balanced position at 1:3:2 133-134-135. Did not adjust the RIOT position but might in the morning. Apple has sold off significantly not looking like a rise to 134 by Friday but with these markets you never know. Riot a rise to 120 took place today so might end up with that max profit pin. I'm screening a few other plays for next week with the same strategy and am considering a thread on the trading journal page to keep giving this a test over the next three months. I appreciate everyone's comments and advice. Am going to draw up some rules for entries adjustments and exits to go by.
Going into the last day for these options. APPL Collected $0.55 on apple rolled down the 136 calls to 135 paid 12 cents to do it. Sitting on a profit of $0.33 if they go off the board worthless. Chance they could rally to 134 tomorrow for max profit.
In Riot well it's been a riot. Stock is up big with the moves in bitcoin. All options in the money and need a sell off tomorrow to become a profitable trade. Time will tell. I was not able to roll down the 22 calls earlier in the week. Had I been more open to this idea earlier it would have limited down the risk. Or I could have been happier with a smaller credit at the set up with less risk in a balanced fly than the $0.45 received. So many options with options.
See what tomorrow brings and if this theory holds true that stocks move towards the strike with the highest open interest on expiration day. Thanks to everyone who commented on the thread and gave advice input. I started a thread on the journal page to keep this strategy going for a couple of months and will post over there weekly trades and results. Looking for trades for next week and have a few lined up to pull the trigger on.
Curious to those of you who trade the fly on a regular basis what your usual profit target is as a percentage of max profit and whether you set it and forget it or actively change the target the last couple of days before expiration.
The "Trading Options at Expiration" book by Jeff Augen came in the mail today. Thanks for the recommendation on that. Will probably read it tonight when i finish up the last season of Cobra Kai. Happy trading.
In Riot well it's been a riot. Stock is up big with the moves in bitcoin. All options in the money and need a sell off tomorrow to become a profitable trade. Time will tell. I was not able to roll down the 22 calls earlier in the week. Had I been more open to this idea earlier it would have limited down the risk. Or I could have been happier with a smaller credit at the set up with less risk in a balanced fly than the $0.45 received. So many options with options.
See what tomorrow brings and if this theory holds true that stocks move towards the strike with the highest open interest on expiration day. Thanks to everyone who commented on the thread and gave advice input. I started a thread on the journal page to keep this strategy going for a couple of months and will post over there weekly trades and results. Looking for trades for next week and have a few lined up to pull the trigger on.
Curious to those of you who trade the fly on a regular basis what your usual profit target is as a percentage of max profit and whether you set it and forget it or actively change the target the last couple of days before expiration.
The "Trading Options at Expiration" book by Jeff Augen came in the mail today. Thanks for the recommendation on that. Will probably read it tonight when i finish up the last season of Cobra Kai. Happy trading.
Update going into the open..... It looks like hope with APPL to rally towards 134 and an increased profit. That's good news given what will probably happen with Riot. I went to bed with hope with bitcoin futures down 5% and woke up at the end of the rope. Looks like RIOT will open around 25 so looking at a max loss on this one. Lesson learned on narrowing the wings or just using a more balanced set up. Another take away is how quickly the strike with the largest open interest can change. Beginning of the week it was at the 20 strike and now at the 25 strike. Perhaps entering these flies should be saved till two or three days before expiration rather than on Monday. Will update the final outcomes after the close and will give it another go on the journal page next week.
On another note I read "Trading Options at Expiration" last night by Jeff Augen on a recommendation from a poster. A good read. Some strategies he recommends are trading straddles on expiration days in stocks with a higher probability of a big move. Entering in the morning and liquidating by mid day or by 2:00 pm when stocks can pin and trade in a range. Might give that a go in Uber today that looks to open sharply lower. It was interesting to see this as it was something I used to do a decade ago in commodity options in the grains on expiration day. Had some success with it back then. He has some other intriguing ideas with ratio spreads and selling straddles on Thursday of expiration week tied to the sharper drop off in the theta window experienced Thur to Fri. Will probably reread this book over the weekend. Because of their day trading focus his book is better for those well capitalized to avoid the pattern day trader rule.
Wishing everyone a profitable Friday.
On another note I read "Trading Options at Expiration" last night by Jeff Augen on a recommendation from a poster. A good read. Some strategies he recommends are trading straddles on expiration days in stocks with a higher probability of a big move. Entering in the morning and liquidating by mid day or by 2:00 pm when stocks can pin and trade in a range. Might give that a go in Uber today that looks to open sharply lower. It was interesting to see this as it was something I used to do a decade ago in commodity options in the grains on expiration day. Had some success with it back then. He has some other intriguing ideas with ratio spreads and selling straddles on Thursday of expiration week tied to the sharper drop off in the theta window experienced Thur to Fri. Will probably reread this book over the weekend. Because of their day trading focus his book is better for those well capitalized to avoid the pattern day trader rule.
Wishing everyone a profitable Friday.
Didnt want to say too much before,but perhaps you should look at the ATR and see if a 1 ATR move puts you in loss territory...IMHO,you should have spent a bit of the credit to shift the R/R ratio..Of couse I am playing hindsight analyst,but the 10%+ ATR in RIOT was the reason I thoght you should buy in the vertical
Final Update. Some interesting twists at the end.
RIOT took off at 2
o pm for max loss plus $3 to avoid paying the exercise fees. Bummer on this one but hey at least it's tied to bitcoin no matter how small my digital wallet is. If I could only find my code from the $10k in Bit I bought 10 years ago. Have been to psychics and hypnotist trying to remember it. Joking on this point. Am thinking of writing a screen play around this problem though for shits and giggles.
APPL - kept the profit from the initial credit of $0.55 minus the payment to bring in the wing. Kept the order working all day in case APPL had a nice rally and could make some more on it but my friends at TT filled it at a shit price and cost me another $4. Not sure why they did this as I had clicked actively monitoring in the morning. This happened before with a expiration day straddle. Maybe I logged out for a coffee break earlier and had to click it again when I logged back on. Needless to say if I want to experiment with expiration day plays I need to find a way to have my broker stop choosing my exits when I'm waiting for a move. Maybe I can bitch and get a free coffee mug out of it or something like that. If I do I'll post a picture of it.
Starting on the journal page Monday will keep working this for a couple months and post the results. Thanks for all the input. Hope everyone had a good Friday.
RIOT took off at 2
o pm for max loss plus $3 to avoid paying the exercise fees. Bummer on this one but hey at least it's tied to bitcoin no matter how small my digital wallet is. If I could only find my code from the $10k in Bit I bought 10 years ago. Have been to psychics and hypnotist trying to remember it. Joking on this point. Am thinking of writing a screen play around this problem though for shits and giggles. APPL - kept the profit from the initial credit of $0.55 minus the payment to bring in the wing. Kept the order working all day in case APPL had a nice rally and could make some more on it but my friends at TT filled it at a shit price and cost me another $4. Not sure why they did this as I had clicked actively monitoring in the morning. This happened before with a expiration day straddle. Maybe I logged out for a coffee break earlier and had to click it again when I logged back on. Needless to say if I want to experiment with expiration day plays I need to find a way to have my broker stop choosing my exits when I'm waiting for a move. Maybe I can bitch and get a free coffee mug out of it or something like that. If I do I'll post a picture of it.
Starting on the journal page Monday will keep working this for a couple months and post the results. Thanks for all the input. Hope everyone had a good Friday.
- Why was any leg of the AAPL (+133,-134,+135) position closed by TT?
- Wasn't it OTM all day?
- Fridays day range for AAPL was $130.23 - $132.63
I can't quite figure that out. I sent them an email about it and no response yet. You're right it was out of the money all day do it doesn't quite make sense to me. And when I looked back at the fill they only took off the 133 and 134 call leaving the 135 to expire. I've had this happen a couple of years ago and the issue then was I hadn't clicked the actively monitoring button the same trading day. All I can think is I had logged out and taken a coffee break earlier and maybe when I came back I needed to click the button yet again to indicate actively monitoring. Those with more brokerage knowledge than I...... is this some risk management algo closing trades on expiration day or is it being done by actual employees looking at the trading book?