Stock / Symbol: GameStop / GME
Strategy: Vertical Put Spread
Trade entry date: 03 Jun 2022 / $132.50
Price at this post: $119.25
Reasoning: GME is now down about 10% from where it was on this position's entry. Given the significant of this move, I'm a bit disappointed that the position isn't more profitable at this point (up 4.5%). This is because the net position delta was not that negative on entry (at -3.1) and the Vega was negative. The net position Greeks are currently: -2.5 Delta, -0.03 Gamma, 0.9 Theta, and -0.2 Vega. With the Gamma negative, the further GME moves down, the less negative the position's Delta will get. So, I'm just going to attempt to close the trade here for about a 7.7% return in under 2 weeks.
Trade Exit Order:
STC 1 GME 15Jul22 155 put
BTC 1 GME 15Jul22 150 put
For a min net credit of $4.20 per contract (GTC order, limit order). The mid is currently at a credit of $4.12. In order to get filled, GME will likely need to trade a bit lower or have it's IV (implied volatility) drop.
Analysis:
Max Risk: $390
Max Reward: $110 or 28% with GME under $150 on Jul 15th
Profit Range: GME under $150 at market close on Jul 15th
Estimated Commission (round trip): $2.60
Suggested Upside Stop @ $149
Anticipated Profit / Loss upon fill: $30 or 7.7% (pre commission)
