What is the best approach for this trade ?

SPX Blaster said:
Okay, this is what I see. Correct me if I'm wrong. You are long a futures contract that is down by 85 SP points. On Sundays open, it may be down 185 points. You are also long a SP put option where the Delta is at .941. It seems you have a hedged position, as both trades will move in exactly the opposite direction. If you hold both positions open till the end of the week, it looks like you will lose about $1400. You need to stop the increasing losses of the long contract by closing it. If you close it, and the market continues to tank, your option position will increase in value. If SP crashes next week and you close the contract. The put will be extremely profitable, and it may actually turn out you could make a profit.
You need to stop the losses from the contract and let the option run into more profits.

Take note, I am looking at it this way due to the fact I think the stock market is in big trouble and will drop big time next week.
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The position is down -70 points on the ES. If I close ES and keep put open it would be an L of 70 pts / $4.5k and mkt dir is unknown as of now.But per understanding max L is 21 pts with the put in place and the ES contract open.

Maybe better to buy / sell another Opt on this rather than close the ES since it has max L covered for now. So main tgt is reduce the put premium further below 21 pts.

If mkt going to tank then maybe buying another put is an opt rather than close ES for this ? What do you think ?
 
Another thing you could do is close all positions on Sunday open. Take your losses and take the rest of the week off.
 
etrades said:
Hi guys,

What is the best approach with this trade below ? The put is now about 21 points buy price as I had sold some call earlier and made about 5 points on it.

Also, is this assumption accurate that if the put is ITM on Aug 30 then it will be exercised by the brpker and this means the max L on this will be the purchase price of the put - and the Futs position will be closed with this.


View attachment 207674
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SO this is "Married PUT" as simple as that.meaning Max loss on expiry = the cost of the put which is 26.55 pints x $50 minus the 5 points x $50 you say you have earned by closing a sold call option on ES some time ago? correct ?
- sell another OTM call with 30 Aug expiry to recover some of the 21 points lost?
- Do nothing and have 21 pints loss
 
by the way what was the original Call position was it part of this Married PUT in other words did you do a Collar?( Long Fut+ Long PUT + Short Call)
 
etrades said:
yes correct
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so could you disclose what was the original call position and it's close?
Main question then if this was a Collar then what was the reasoning behind it in the first place ? what was your expectation?
Did it had any upside?
Your Downside protection was alomst at 100% as you ahve used nearest strike PUT ( 2936-2935)

So far we know
Long ES @ 2936
Long ES PUT Strike 2935 = - 26.55
Short ES Call Strike= X ? Price = Y
Closed Long CALL =Z ? ( Y-Z = 5 point)
 
Looks like SP rallying. Your long contract will be losing less. But your put option will reduce in value.
 
While you guys are all debating how many bearish put spreads can dance on the head of a pin, Mr etrades here lost an opportunity to buy a 2930 call for ~$3.00 all day long. Could've bought the 2930/35 spread for ~60¢ midday. Either one would've completely wiped out any chance for a loss from his very δ-neutral short ES[2936.3] and long ES[2935] put.

Now, as of now, the Aug30 ES 2930 call sits at >$5, and the 2930/35 spread is >$1.


"Peace out, y'all."


Ooops. Let's travel back in time......
https://www.elitetrader.com/et/threads/what-is-the-best-approach-for-this-trade.335382/#post-4915196 :cool:
versus,...
SPX Blaster said:
DO NOT BUY A CALL!
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tommcginnis said:
While you guys are all debating how many bearish put spreads can dance on the head of a pin, Mr etrades here lost an opportunity to buy a 2930 call for ~$3.00 all day long. Could've bought the 2930/35 spread for ~60¢ midday. That would've completely wiped out any chance for a loss from his very δ-neutral short ES[2936.3] and long ES[2935] put.

Now, as of now, the Aug30 ES 2930 call sits at >$5, and the 2930/35 spread is >$1.


"Peace out, y'all."
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Pretty easy to make that "suggestion" after the fact.
 
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