Coffee Options Trade - Adjustment

Currently SHORT the 135 SK and Long the 140 SK (Bear Put Spread) - Thinking of making the following adjustment.
Closing the 135 SK and opening a new spread - Selling the 135 CALL and Buying the 140 CALL (Bear Call Credit Spread).
Diagram shows how my initial Profit and Loss areas have changed.
I am just trying to learn about adjustments with options and thought I would share this with you guys - any thoughts ?

 

whats your reasoning in making the adjustment, one bearish stance to another bearish stance?

 

That's a good point - trying to move from a limited profit on the downside - to an unlimited profit scenario on the downside - with some protection on the upside.

 

You're trying to move to unlimited profit on the downside on a commodity that's spent over a year basing itself? Maybe you'll see 128 but this doesn't seem like a trade you should embark on a long-duration campaign on.

 

Ok - thanks - KCZ moves higher - I closed out my SHORT PUT to be more aggresive the short side - KCZ closes higher. Possibly a good time to enter the Bear Call Spread.

 

I can now turn this trade into a CALL from a PUT, by buying the underlying and going LONG! Possibly a better move than cutting my losses here as the contract runs till October.

 

Well the CALL position is turning out quite well. If I close my long underlying now I will reduce my risk from $2500 down to $500! Thinking of entering into a PUT BUTTERFLY by keeping my long SK40 PUT open, SHORTING 2x 145 PUTS and buying the 150 PUT with maximum loss on this adjustment being at the 145 SK with 2 weeks to go on the Oct contract.

 

Ok going synthethic call with Long the underlying and long the put has paid off! I turned a LOSS into a PROFIT! Very happy with the result. Not sure how I calculate the return on the trade?




1, BS = Entered a Bear Spread

2. CS = Closed the Short leg (Closed the Short PUT)

3. L = Went Long the underlying making the Put Bear Spread into a CALL

4. ExL = Closed long position making a profit of $1400

Regards

 

Just send me 50% of your profits for telling you to stop being bearish.

 

LOL - yes it was nerve racking holding on to those days when it was going up, knowing too well it could turn and fall like a rock any time which would blow the whole trade.