Saturday, January 14, 2017

Weekly: Managing a trade vs. Mangling

Most have heard of the term "managing a trade." There are any number of ways to do this, rolling, getting stopped out, doubling down. I tend to favor rebalancing back closer to delta neutral by selling more layers of options and committing more capital. Mangling is what happens when managing goes haywire. My misadventures in BRKB this week were close to the line. 
Here are the trades: p = puts, c = calls, number at the end of the line is price per contract. Cover means buy-to-close.

Mon Sell UNH 172.5 23
Mildly bearish play on Facebook earnings. The debit backratio max profit occurs if FB declines to 110 (currently 124.4) at Feb expiration. If it is up or steady, it loses. A decline below 100 also loses. I sell a layer of closer in puts to make it delta neutral for now. Earnings are out after the JanW4 puts expire.

Sell FB backratio 131 debit: Buy FB Feb 120 p 299
Sell 2x FB Feb 110 p 84

Sell FB JanW4 115 p 30
Sell FB Jan 118 p 19

Tue Sell BRKB Feb 150 p 48
Sell BRKB Feb 165 c 155

Wed Sell BRKB Feb 155 p 92

Thu Sell SPY Feb 236 c 17
Sell DIA Feb 206 c 21

Sell BRKB Mar 165 c 225
Sell BRKB Jan 157.5 p 31

Sell IWM Feb 144 c 14

Sell SPY backratio: 
Mar 199/205 Buy SPY Mar 205 p 92
Sell 2x SPY Mar 199 p 58

Fri I took the "head fake" and sold on the steep decline on Thursday. I rebalance to limit the damage.

Sell BRKB Jan 160 p 39
Sell FB Jan 120 p 25

Cover (buy-to-close) SPY Jan 211.5 p 03 for a 90% profit
Sell IWM Feb 122 p 30

No comments: