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Thursday, July 5, 2018

August RUT Elephant

Trade Details:

SELL 20 RUT August 1510/1500 Credit Put spreads @0.60 Credit
SELL   8 RUT August 1760/1770 Credit Call spreads @0.90 Credit

Long hedges:
BUY  20 IWM August 177 Calls @0.18
BUY   1  IWM August 154 Puts @1.00

Total Net Credit: $1,460
Days to Expiration: 43


Risk profile:
 

RUT Chart for future reference:



Trade Update (July 10, 2018)

Closed CALL side of Elephant:

8 RUT August 1760/1770 Credit Call spreads @2.05 Debit
Original credit received was 0.90 Credit. 
Net loss 2.05 - 0.90 = 1.15 per spread. $920 in dollar terms.


20 IWM August 177 Calls @0.30 Credit
Original debit invested was 0.18.
Net gain 0.30 - 0.18 = 0.12 per contract. $240 in dollar terms.

Combining both, the loss on the Call side of the Elephant is $680
The Put side (1510/1500) remains in play and with its total credit of $1,100 will eventually make this Elephant a profitable trade as a whole.


Trade Update (August 17, 2018)

Put side of Elephant expires:

20 RUT August 1510/1500 Credit Put spreads @0.60 Credit
a $1200 profit
 

1  IWM August 154 Puts @1.00 Debit
a $100 loss

Net-net it is a $1,100 gain on this side of the Elephant.
The August RUT Elephant is now history and it turned out to be a small winner despite having lost on the Call side. Final gain is 1100 - 680  = $420


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