Happy Birthday to the Dutch Queen.
That was a scary move up this morning - my RUT position was a large amount of delta's short - I was ready to give it another big swing if we would break 500 with any conviction - but sit on hand trading work well enough.
My RUT condor has no downwards risk anymore all the puts are off - today the last 390-380 put spread came off. Going down is a save route for this trade.
The butterfly is still full of potential. The two butterflies consist of the left-over 380-430 debit spreads, the other side 430-480 is off. Butterfly two is still largely intact.
I started to box in the 380-430 spread by buying a ratio put spread 430-380. Buy 1 430 and sell 3 380 cost 60ct. This way I have locked one 380-430 call spread in for a max profit of $50 minus the 60ct. Over the next days I will try to lock the rest in a similar fashion.
In the above mentioned box I have of course accepted the risk of 2 naked 380 puts. I can offset that risk against not having to worry about 20% of a very expensive 380-430 debit spread.
If you don't know the concept of a box - check an option book - it is a legitimate strategy. Normally used by market makers to square off a messy inventory. I do it here because closing the full 380-430 for currently $48 leaves per 5 lot $1000 on the table. The 430 strike is further than 1sd out, this make you believe the $1000 is easy to gain. Nothing is easy in this market hence I try to collect a big chunk of the $1000 by being creative.
Tomorrow is 1st of the May - Since we have become a socialist country (at least according to Fox News) we might want to sing the International together at market opening. I grew up in what you would call a socialist country - I can assure you guys the US is very far from getting close to be a socialist country. But feel free to practice the lyrics maybe Obama will make the song mandatory very soon.
You are getting fancy with the RUT position. The Queen would be proud of the Dutch in NewYork.
Posted by: Bobby B | April 30, 2009 at 09:24 PM