Stock / Symbol: SPDR DOW Jones Industrial Avg ETF / DIA
Option Strategy: [private_monthly]double calendar[/private_monthly]
Trade entry date / price: May 17 / $152.60
Price at this adjustment: $154
Current Position: [private_monthly]
long 2 DIA Jul13 154 calls
short -2 DIA MayWk4 154 calls
long 2 DIA Jul13 151 puts
short -2 DIA MayWk4 151 puts
at a net cost of $3.76 per contract[/private_monthly]
Reasoning: Upside stop triggered. Going to adjust by buying back the 2 short calls and selling one of the long calls for close to zero net cost. This adjustment will protect us should DIA continue higher and allow us to profit on even a modest pullback. With the adjustment, our Greeks will adjust from -57 delta to -7, from 22 theta to 4, and from 79 vega to 68. Come Friday, we'll look to either close the position if DIA is lower from this point, or sell additional puts and calls if it's higher.
Trade Adjustment Details:[private_monthly]
STC 1 DIA Jul13 154 call
BTC -2 DIA MayWk4 154 calls
at the market.
[/private_monthly]
Max Risk: $550 (adjusted down from $752)
Max Reward: $115 or 20% (at current volatility level) at $151 by May 24 / unlimited over $156.55
Profit Range: 150.00 to 153.75 and at 156.55+ by May 24 /
Suggested Upside stop: NA
Suggested Downside stop: @ $150.50
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