Not the brightest bulb on the block here, but it seems to me that you would have to have some expectaton that ISRG was going to revert towards 130 to want to fly this trade. From what I can see, the choice was take an $8 and change profit now or risk $6 of it to go for a max of $17. From there it seems like it's an judgement call.
Riskarb's combo to fly conversion journal
- Thread starter riskarb
- Start date
Not the brightest bulb on the block here, but it seems to me that you would have to have some expectaton that ISRG was going to revert towards 130 to want to fly this trade. From what I can see, the choice was take an $8 and change profit now or risk $6 of it to go for a max of $17. From there it seems like it's an judgement call.
The best profit I saw on the straddle today was about $5 - $6 of profit and I considered pulling the trigger. However ISRG seemed to have support everytime it made a dip lower- so there is some expectation of a drift higher in the next 2 weeks. The conversion to the FLY was for a credit of $2.40. So the FLY now has a minimum profit of $2.40 and maximum profit of $17.40 anywhere with greater profits of course between 115 and 145.
I do not see it as risking the difference between the profit of closing the straddle now or rolling into a FLY. I see it as locking in a lower profit and removing risk while being able to stay in for the potential of even more. I believe the expectation is that if you do a bunch of these consistently each week or so that a few will have significant profits (not necessarily max profits), most will have small profit to flat, and a few will be locked in for a net debit loss. Balancing and heding properly will allow you to have a net positive P/L.
I cannot get the actual feel just following risk's trades, I have to do them as well. Also I have my own scans using chartbender.com so I do not just copy his trades LOL. (no offense risk but I find blind copying is never a good learning method).
I do not see it as risking the difference between the profit of closing the straddle now or rolling into a FLY. I see it as locking in a lower profit and removing risk while being able to stay in for the potential of even more. I believe the expectation is that if you do a bunch of these consistently each week or so that a few will have significant profits (not necessarily max profits), most will have small profit to flat, and a few will be locked in for a net debit loss. Balancing and heding properly will allow you to have a net positive P/L.
I cannot get the actual feel just following risk's trades, I have to do them as well. Also I have my own scans using chartbender.com so I do not just copy his trades LOL. (no offense risk but I find blind copying is never a good learning method).
Well, I was right on the money. I said that ISRG will be trading in the low to mid 120's by afternoon and a gain of $6-$8 on the straddle. It looks like we've got the upper range of that prediction. Since your bias OC was to the upside, I'm not sure the fly was a necessary trade at a 63% I.V. when those are currently going for 49% or so.
Great call you two. Trust you both traded in line with your own predictions and have made bank today 
Ahhh but my issue of ESP weekly did not come in time where I would have seen the exact IV figure at 12:47 PM 
.
It is no longer a pure IV play but a play for the stock in between 115 and 145 for additional profits on top of the guaranteed credit. In other words the profits are banked and I still have a ticket for bigger profits. I only did 3 contracts here so I am not expecting a home run.
Right now the straddle alone profit if closed is only slightly more than the current FLY profits if closed. As IV drops, "time" is sucked out of the FLY which shrinks the body and expands the profits, in addition to the 2 week to expiration theta kicking in
Since I cannot say exactly what ISRG would do when IV was at 63% except for expectation that the stock would float higher, I went for the adjustment.
I will take 10 of these adjusted positions easily
.
.It is no longer a pure IV play but a play for the stock in between 115 and 145 for additional profits on top of the guaranteed credit. In other words the profits are banked and I still have a ticket for bigger profits. I only did 3 contracts here so I am not expecting a home run.
Right now the straddle alone profit if closed is only slightly more than the current FLY profits if closed. As IV drops, "time" is sucked out of the FLY which shrinks the body and expands the profits, in addition to the 2 week to expiration theta kicking in
Since I cannot say exactly what ISRG would do when IV was at 63% except for expectation that the stock would float higher, I went for the adjustment.
I will take 10 of these adjusted positions easily
.Quote from optioncoach:
Ahhh but my issue of ESP weekly did not come in time where I would have seen the exact IV figure at 12:47 PM
It is no longer a pure IV play but a play for the stock in between 115 and 145 for additional profits on top of the guaranteed credit. In other words the profits are banked and I still have a ticket for bigger profits. I only did 3 contracts here so I am not expecting a home run.
Right now the straddle alone profit if closed is only slightly more than the current FLY profits if closed. As IV drops, "time" is sucked out of the FLY which shrinks the body and expands the profits, in addition to the 2 week to expiration theta kicking in
Since I cannot say exactly what ISRG would do when IV was at 63% except for expectation that the stock would float higher, I went for the adjustment.
I will take 10 of these adjusted positions easily
As you please. Regardless though you're making some dough and that's what's important, right???
Maybe they can gives us some spreads and over/unders for the Super Bowl too .
. Quote from momoneythansens:
Great call you two. Trust you both traded in line with your own predictions and have made bank today
Quote from iloveoptions:
As you please. Regardless though you're making some dough and that's what's important, right???
Now if only the AAPL of my heart makes more money than it already has,, i'll be really happy.
www.collective2.com/go/optionstrader
Quote from iloveoptions:
Now if only the AAPL of my heart makes more money than it already has,, i'll be really happy.
www.collective2.com/go/optionstrader
I'm gone guys... This has gone waaaay off-topic with Tarek's spamming the journal with his paper trading nonsense.