Important Trade Updates

Hi Steemians,

usually I do this trade updates every Friday, but today, I had to manage some positions.
If you haven't read my series on recent options trades, you can do it here:
https://steemit.com/trading/@stehaller/trade-ideas-for-today-s-pop-in-implied-volatility
https://steemit.com/busy/@stehaller/more-trade-ideas-for-this-high-iv-market
https://steemit.com/trading/@stehaller/trade-updates
https://steemit.com/trading/@stehaller/trade-updates-week-2
https://steemit.com/trading/@stehaller/trade-updates-week-3

Ok, now let's talk markets.

SPY had a huge rally the past trading days:

source: tastyworks


And as expected, there was a huge vol crush:


source: tastyworks


The price of SPY blew through our short call of the SPY May 234/248/268/274 Iron Condor.
So at this point this trade should be a loser, right?
Not so fast.
Thanks to the huge drop in implied volatility, our SPY May 234/248/268/274 Iron Condor is trading for $3.62 at the moment.
Since we collected $3.87 in net credit, when we opened the position, this trade is still a 25 cents winner ($25 per one lot).
We could have rolled up our 234/248 put spread to the 254/268 strike, to create an Iron Fly, neutralize our short deltas and collect more credit, but I decided to take my $25 profit and run.

source: tastyworks


Nasdaq 100 also had a huge rally:

source: tastyworks


The price of QQQ is above the short strike of our QQQ May 162/165/185 Broken Wing Butterfly.
But still profitable, since we collected $2.75 in net credit, when we opened the trade.

source: tastyworks


The QQQ BWB gives us 42 short deltas at the moment, so I leave the trade on, since I like a little short deltas in the Nasdaq.


Our KRE May 58 short put is doing fine, so I'll leave it on.

source: tastyworks


The XLE Straddle is also doing fine, so nothing to do here:


source: tastyworks


Our GLD BWB is also working in our favor, so nothing to do here:


source: tastyworks


But, since we freed up some buying power today, we need to put new position on, since our theta numbers are pretty low at the moment. So we need to sell some premium, which is pretty hard in a low IV environment.
But we have to stay active and since I don't like earnings plays, I go with a simple
30 delta strangle in IWM

source: tastyworks

• this trade costs us $2,639.20 in buying power reduction and gives us 5.19 in daily theta decay
• the goal is to manage this trade at 50% of max profit (=$162.50 per one lot)
• our stop loss is 2x credit received (=$625)
• if we only have 21-23 days until expiration, we close or roll the trade to the next expiration cycle.
• if one of our short strikes gets hit, we roll the untested side down/up into a straddle
  
  
  This short strangle is a delta neutral, long theta, short vega position.
  Since implied volatility is so low at the moment, we are in danger of getting hurt by a vol expansion, so we need a hedge.
  This could be done by short deltas, which we already have or by a long vega trade like a

SPX May/June Put Calendar

• we buy to open the June 45 delta put and sell to open the same strike in May
  
  source: tastyworks
• this trade costs us $16.65 ($1,665 per one lot) in debit
• we collect 16.64 in daily theta decay
• our profit target is 10% of the debit paid, so $166.50 per one lot
• if we don't hit our profit target, we take the trade off, when the short leg expires.
  
  
  If you want to learn more about options trading you have to wait, until my book comes out.

Stay tuned and watch https://www.tastytrade.com/tt/

I wish you a great trading day tomorrow,
Stephan Haller

Legal disclaimer: These are not trade recommendations. Options involve risk and are not suitable for all investors. The trades shown below are for educational purpose only.