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BookingAlpha Option Trading Advisory

Thursday, September 7, 2017

October 2017 RUT Unbalanced Elephant

Trade Details:

20 RUT 1280/1270 Credit Put spreads 0.55 Credit ($1100)
 7  RUT 1470/1480 Credit Call spreads 0.95 Credit ($665)


2/50 IWM Unbalanced Long Strangle. Strike prices 130/148
0.74 debit for each of the 130 strike Puts
0.06 debit for each of the 148 strike Calls.
Total debit paid: $448

Net Credit: $1317
Days to Expiration: 43

Profit picture:
(Click on image to enlarge)

A RUT Chart for future reference and self-study:
The below chart screenshot was taken few minutes after order entry and RUT had started to decline.
(Click on image to enlarge)

Trade Update - September 25, 2017
(Click on image to enlarge) 

Closed 7 RUT 1470/1480 Credit Call spreads @2.95 Debit
Original credit was 0.95, so the loss is 2.00 per spread. In seven spreads that is $1,400

Closed 50 IWM 148 strike Calls @0.26 credit
Original debit paid was 0.06. So, this is a net 0.20 gain per contract. In 50 contracts that is a $1,000 gain.

Combining both components of the Call side of the Elephant, there is a net loss of $400 dollars.
The PUT side of the Elephant remains open, and its net $952 credit will be enough to compensate for today's loss.

No more upside risk in RUT after today.

Trade Update - October 20, 2017

20 RUT 1280/1270 Credit Put spreads expire for max profit ($1100)
2  IWM Long 130 Puts expire for max loss on Saturday ($148)
Net-net this is a $952 win

Combining this result of the Put side ($952) with the earlier loss from the Call side ($400), the October Elephant resulted in a $552 winner in the end.

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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