Stock / Symbol: General Motors / GM
Strategy: Diagonal Put Spread
Trade entry date / price: 25 Aug 2021 / $49.80
Price at this post: $50.65
Reasoning: With GM trading near the strike of the position's short put, I'm going to attempt close out the position for a relatively quick, 6,4% return. On entry, the net position Greeks were approximately: 33.1 Delta, -4.7 Gamma, 1.1 Theta and 15.1 Vega. The Current Greeks are: 15.8 Delta, -17.2 Gamma, 7.7 Theta, and 15.9 Vega. If GM can remain between $50 and $51, and IV (implied volatility) goes a bit higher, the order to close the put spread should fill by Friday. If not, I'll adjust the position by rolling the short put.
Trade Exit Details:
STC 1 GM 17Jun22 45 put
BTC 1 GM 17Sep21 50 put
For a min net credit of $3.10 per contract (GTC order, limit order). The mid is currently at a credit of $2.78.
Then:
STC 1 GM 15Oct21 57.5 call
At the bid or better. The current bid is at $0.21
Analysis:
Max Risk: $780
Max Reward (at current IV level): $65 or 8.3% with GM at $50 (or) unlimited with GM over $57 by Sep 17th
Profit Range: GM trading above $49.25 on Sep 17th
Estimated Commission (round trip): $3.90
Anticipated Profit / Loss upon fill: $50 or 6.4% (pre commission)
