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Tuesday, October 4, 2016

November SPX Lazy Elephant

Today I initiated an SPX Lazy Elephant position:



TRADE DETAILS:
 
Buy 10 SPX November 1970 Put (6.45 debit)
Sell 10 SPX November 1980 Put (7.15 credit)
Sell 10 SPX November 2250 Call (2.50 credit)
Buy 12 SPX November 2260 Call (1.60 debit)
No long SPY Put hedge.

Net Credit: $1280 ($700 from Put side, $580 from Call side)
Max Risk: around $8720 to the downside
Days to expiration: 44

(Click on image to enlarge)


SPX Chart for future reference:
(Click on image to enlarge)

Trade Update - October 13, 2016

Closed Call side of the elephant:

Bought to Close 10 SPX Nov 2250 Call @0.75 debit each
Original credit: 2.50.
Balance: +$1,750  (2.50 - 0.75) * 100 * 10 = $1,750

Sold to Close 12 SPX Nov 2260 Call @ 0.50 credit each
Original debit: 1.60.
Balance: -$1,320  (0.50 - 1.60) * 100 * 12 = -$1,320

Combining both legs:  $1,750 - $1,320 = +$430
This is 74% of the maximum potential profit ($580) of the Call side of the Elephant. It was obtained in just 9 days.

The Put side is still in play. Planning to close it before elections day.

Trade Update - October 24, 2016

Closed Put side of the elephant:

Bought 1980/1970 Credit Put spread for 0.25 debit.
Original credit received was 0.70 for the spread.

Balance: +$450 (0.70 - 0.25) * 100 * 10 = $450

Now, combining the Call side (closed earlier) and the Put side, the total gain is $430 + $450 = $880.
We were in this position for 20 days (Oct 4 - Oct 24) and made +10.1% return on Risk (Max risk was $8,720). We made $880 out of a maximum potential profit of $1,280 with still 25 days to expiration.

Check out 2016 Track Record


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