Stock repair strategy
- Thread starter wxytrader
- Start date
Now was that so hard? 90% of this site has profound ADHD. It's mentioned once in your gibberish on page 2. I had to ctrl-f.
Yes! The ratio spread when combined with shares becomes a (synthetic?) fly with the shares acting as the upper wing.
My stock position in the stock repair strategy would be at a break even 0 (-5050 +5050)@ 19.72
This is the pnl if I roughly convert the ratio spread to a fly by adding an upper wing (to mimic my stock position) with a 22.25 strike @ 2.22 (22.25 avg stock price/10 contracts). The fly would be at a break even on the low wing @ around 19.72.
It works! Heck by the time I figure this trade out I won't need it anymore...the price keeps climbing
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It's not a synthetic fly. It's share risk downside and the strike width of the backspread, less the debit, plus the share gain, upside. It's not bimodal like a fly (always long delta) and has D1 risk downside. There is no point in a "repair" strategy if you flip deltas upside.
It's what should be added to the Wheel. Assigned on put -> solve for exp with zero outlay on short backspread -> goal to assign out of position at max gain as all contracts and shares cross above 20 (max gain) -> short put to open a position.
The Wheel is still dumb.
It's what should be added to the Wheel. Assigned on put -> solve for exp with zero outlay on short backspread -> goal to assign out of position at max gain as all contracts and shares cross above 20 (max gain) -> short put to open a position.
The Wheel is still dumb.
So it's long 100 downside below 17, long 200 (less debit) from 17-20, and terminates at max gain upside above 20.
I wasn't going to bother with this post, but it's not something you'd want to do as a standalone position unless there was upside skew (in high vol of vol shares like ARM, meme stocks, etc) where your backspread is at edge.
I wasn't going to bother with this post, but it's not something you'd want to do as a standalone position unless there was upside skew (in high vol of vol shares like ARM, meme stocks, etc) where your backspread is at edge.
If I'm understanding this correctly (and I'm probably not) you're saying to short a put at the max profit of the fly...but that would be itm so if price doesn't move up I am getting assigned at a loss (price-strike less credit for the fly and the short put) ?
(Ignoring any loss on the stock position if I have one)
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Heres what I dont get..
You claim to be a waver,directional and options a waste of time...
I thought you guys play for the major impulse moves,hopefully catching Wave 1.
All I see you doing is selling cheap puts in a hopeful C wave,and instead of owning the stock,you are now looking for "repair " and giving away all upside if dead right...
You hate stops,but like to play for breakeven if right??
Does that make sense??
You claim to be a waver,directional and options a waste of time...
I thought you guys play for the major impulse moves,hopefully catching Wave 1.
All I see you doing is selling cheap puts in a hopeful C wave,and instead of owning the stock,you are now looking for "repair " and giving away all upside if dead right...
You hate stops,but like to play for breakeven if right??
Does that make sense??
Short the put -> shares drop -> assigned -> long shares at 22 with current mark at 17 -> short 17-20 backspread.
You choose the strike x maturity that results in a minimal outlay as it's in effect raising your cost basis on the shares. The resulting position is 100 share risk below 17, double gains (x-section, not from inception) WITHIN the strikes, and pays that value above the wing.
In the above pic the combo is doing better, but isolating the backspread shows the debit dropping as it's a bear spread at inception (and MARA is rallying). You have to choose a date so use a heuristic that achieves the backspread at no cost.
I like the combo just that shorting puts on meth-cos is generally dumb. Shorting puts, generally.
I like the combo just that shorting puts on meth-cos is generally dumb. Shorting puts, generally.