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SPX DEC 19 <115> ATM Butterfly - 25 points wide

Discussion in 'Options' started by tom, Aug 27, 2014.

  1. tom

    tom Administrator Staff Member

    NEW TRADE
    SPX 2000.10 +2.20
    I mirrored Jim's DEC "Christmas Tree" trade today. Jim put a 15 lot and I did a 10 lot. It's a 25-wide at-the-money DEC 19 SPX butterfly. There are two ways to approach this trade:
    1. Let it go and check it on Dec 19
    2. Trade it. If the market makes a move up or down, adjust the trade to lift that side of the fly up to have a profit at expiration.

    I'm probably going to use method #2 and Jim is using method #1.

    This trade is a bit farther out in time so it will be a more relaxed trade. The Greeks Calculator is showing warnings but that's because the Theta is so low because there is so much time to expiration. Nothing really to worry about. Butterflies are FLAT this far out in time.

    VIDEO UPDATE

    OptionVue Matrix
    2014-08-26_SPX_DEC_19_BWB_Matrix.png

    OptionVue Analyze Chart
    2014-08-26_SPX_DEC_19_BWB_Chart.png

    Greeks Calculations
    2014-08-26_SPX_DEC_19_BWB_Greeks.png

    Interactive Brokers Trade Log
    2014-08-26_IB_Trade_Log.png
     
    Last edited: Aug 27, 2014
  2. tom

    tom Administrator Staff Member

    Trade Update
    SPX 1999.83 -0.19 -0.01%
    SPX and volatility unchanged. Collected a few dollars of theta but this trade has a LOT of time so not much to do. I did confirm with Jim that he is going to leave his trade alone and not touch it until expiration.

    OptionVue Matrix
    2014-08-27_SPX_DEC_19_BWB_Matrix.png

    OptionVue Analyze Chart
    2014-08-27_SPX_DEC_19_BWB_Chart.png

    Greeks Calculations
    2014-08-27_SPX_DEC_19_BWB_Greeks.png
     
  3. Mike

    Mike Member

    Tom, how do you raise the wing if it needs adjusting? Do you just roll the center strikes up or down? And Jim is just leaving his alone, so willing to accept a full loss?
     
  4. tom

    tom Administrator Staff Member

    Hi Mike. Jim is willing to have a complete loss but he won't have to do anything and he could hit a major home run. To raise a wing, just peel off a few contracts on the side you want to raise.
     
  5. tom

    tom Administrator Staff Member

    Trade Update
    SPX 1996.80 -3.10
    SPX traded lower today but recovered most of the loss. Volume is very low going into the long Labor Day weekend. No trades today and I don't anticipate any tomorrow. With volatility coming out today, the position is up already.

    OptionVue Matrix
    2014-08-28_SPX_DEC_19_BWB_Matrix.png

    OptionVue Analyze Chart
    2014-08-28_SPX_DEC_19_BWB_Chart.png
     
  6. tom

    tom Administrator Staff Member

    Trade Update
    SPX 2003.22 +6.48 0.32%
    SPX was higher today, closing above 2003 and this is a negative delta trade at the moment. Overall it's still in good shape as it's pretty wide for our profit zone so let's let time bake off a bit here. Nothing to do but watch.

    OptionVue Matrix
    2014-08-29_SPX_DEC_19_BWB_Matrix.png

    OptionVue Analyze Chart
    2014-08-29_SPX_DEC_19_BWB_Chart.png
     

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