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BookingAlpha Option Trading Advisory

Monday, March 27, 2017

May 2017 SPX Unbalanced Elephant

Trade Details:

20 SPX 2160/2150 Credit Put spreads 0.65 Credit ($1300)
8  SPX 2440/2450 Credit Call spreads 0.80 Credit ($640)


1/10 SPY 221/245 Unbalanced Long Strangle (1.11 debit for the 221 strike Put, .30 debit for the 245 strike Calls. Total debit paid: $440 )

Net Credit: $1,529
Days to Expiration: 53

Note: A small account could have created a similar risk profile picture for example by playing a regular Iron Condor 2150/2160/2440/2450. Two contracts per leg, and adding 3 long SPY 246 Calls.

As explained on the weekend article, I flipped the order for the May cycle by starting it off with the Elephant, and the Unbalanced Iron Condor will come later.

Profit picture:
(Click on image to enlarge)

An SPX Chart for future reference and self-study:
(Click on image to enlarge)

Trade Update - May 3, 2017

Closed 8 SPX 2440/2450 Credit Call spreads 0.40 debit.
Original credit was 0.80. Net 0.40 gain per spread ($320 total)

Closed 10 SPY 245 Long Calls.
Original debit 0.30, credit when selling today: 0.07 for a 0.23 loss per contract ($230 total)

Combining both pieces, this was a tiny $90 gain before commissions.
Put side still in place and looking very safe at 2 deltas.

Trade Update - May 4, 2017

Closed 20 SPX 2160/2150 Credit Put spreads 0.10 debit.
Original credit was 0.65. Net 0.55 gain per spread ($1,100 total)

Closed 1 SPY 221 Long Put.
Original debit 1.11, credit when selling today: 0.11 for a 1.00 loss per contract ($100 total)

Combining both pieces, this was a $1,000 gain before commissions.

The entire SPX Elephant is now closed, resulting in a $1,090 gain. I would have held the Put side to expiration if it weren't for the fact that there is too much down side exposure in the portfolio at the moment (4 positions. 3 left after removing this one).

For details about the management of Unbalanced Elephant positions consider an membership, where there is also material that discusses how to put this type of position in small accounts too.

Check out 2017 Track Record

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