The position is currently at mid 0.37 (from my 0.36). I don't know if I'll exit today or tomorrow. The whole position is small anyway, risking only 10 contracts. I can't disagree that it was a risky, speculative trade, as the skew pointed to a higher move and I also think it could reach 40 or over. I just thought it may take a breather. In retrospect, without much conviction, I shouldn't have placed the trade at all because the commission cost on 2-legs is not cheap for this stock.
I kind of like it. Big reward potential so warrants the smaller amount at risk. I think Bernanke is a master at managing the market's expectation, so if today ends quietly, maybe it starts to profit. If my math is correct, looks like about a $1.50 range on either side of $37 for breakeven through Friday, and that's about the expected range. But that's just a quick look.
Now I have an uneasy feeling that FB might explode either way in the last two days. I should buy a straddle or reverse my position LOL. But I instead decided to take off half the position @ 0.44, and let the other 5 contracts ride, maybe into expiration. I know that 10 contracts to begin with is chump change, but I wanted to treat the initial position with some respect, which is why I'm taking half off. I'm bored of looking at my index positions and covered call positions so I have several small stock positions to play with and test my individual stock timing.
Jumping from a calendar to a strangle (or similar trade) based on a feeling? No offense, but doesn't sound like a logical approach unless there's been something concrete to change your mind.
No offense taken, not logical and it's a fault. Sometimes I don't trade systematically and I modify a position based on gut feel. I looked at the intraday price action and it made me a little uncomfortable. Anyway, right now FB is at 38. It's closer to the breakeven point, and with one day left, there's a lot of gamma. But since I already took half off, I'm leaving the position until Friday.
Optionatrix, Calendar is looking nice. With a little bit of time and a small move down, you can probably roll the short option out/down to the 36.50 strike for 40-cent credit or more and have a risk free 37/36.50 vertical. Just an idea.
It looked nice in the early AM, but I didn't do anything. Not looking as great now. I'm just thinking to exit the trade sometime today and not to adjust the position at this point.
GregLoehr, the calendar Optionatrix is / was in was 37p calendar, 2nd 9th August? optionatrix said he bought half shorts back (for Aug2nd?), so what did you mean when you said "you can probably roll the short option out/down to the 36.50 strike for 40-cent credit or more and have a risk free 37/36.50 vertical." ?
Well, it didn't materialize, but I meant to buy to close the Aug1 37 put, and sell to open the Aug2 36.50 put. If that trade could have been filled at a 40-cent credit, then the remaining position would be a long Aug2 37-36.50 put spread. I believe the entry price for the calendar was $0.40, so the 40-cent credit from the roll "out and down" (out in time, down in strike), would have offset that cost leaving a "risk free" trade. Of course, the profit in the trade would have been at risk, but no more. Anyway, I didn't see FB drop enough for that adjustment to happen.