SPY put wkly diagonal itm debit spread

T

traderlux

SPY put wkly diagonal itm debit spread
I have been trying out this trade in sim for several weeks, any comments? posted some other info in my journal


thu 3/24 SPY @ $203.11
bto apr/8 207 put
sto apr/1 204 put
$2.27 Db
must be closed by short leg expiry apr 1

the goal is to sell it back for around $3
 
(the last post was in error the trade was down 25% for the day, not 75%)

4/1 fri closed trade at about 50% loss

so far 2 break evens and one 50% loss on 3 closed trades
 
OptionGuru said:
Lots of risk no reward.

Can a profit be made when you take into account the bid/ask spread? I don't think so.



:)
More...
Your observation was spot on. How did you come to that conclusion?

Both puts were ITM and if SPY went down, OP would register a profit otherwise a loss? So, OP should have idea of direction of SPY to execute that trade? Also, ITM means bid/ask spread tended to be wide?

Appreciate your coaching.

Regards,
 
will try again, I don't think SPY will move much this week and trade might have a chance to work
fri 4/1 SPY @ $206.92
bto apr/15 211 put
sto apr/8 208 put
$2.64 Db
must be closed by short leg expiry apr 8
goal is to buy back at $3.00
 
  • SPY at $206.92
  • The long ATM 206.50P/207.00C weekly strangle is priced at $2.01.
  • The options are priced expecting about plus/minus $2.00 (1%) weekly trading range on the SPY.
  • Expected SPY trading range for the week of April 04 to April 08 is about $205 to $209.


DISCLAIMER: The above expected SPY weekly trading range is NOT my opinion on how the SPY will trade this coming week - the above info is based purely on the cost of the 206.50P/207.00C weekly strangle.


:)
 
mon 4/4 the trade was showing a 8% gain

today tue 4/5 closed the trade at $3.00, about a 14% gain

summary 4 trades, 2 break evens, 1 50% loss, 1 14% gain
 
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