Can you kindly explain? Looks to me he shorted a near term strangle and longed a far term straddle. Perhaps he tried to partly pay for the long with a short with the judgement that short term things are not going to move that much but very bullish/bearish long term?
Trade the short position first: Short IWM Apr 22 2016 110.00 Cal @ $1.52 IWM Apr 22 2016 108.50 Put @ $1.97 Close the above position around April 22, 2016 and open the long position at a slightly lower cost than the quotes below: Long IWM Mar 17 2017 109.00 Call @ $7.63 IWM Mar 17 2017 109.00 Put @ $9.12
AKA Baghdad Suicide Bomber, um, Spread Thingy If the front strangles remains OTM for a while it looks OK. Slippage should be considered as an additional cost. If either option in the short strangle goes ITM = more slippage. Gamma gonna get ya if either short option moves DITM. If short call gets ITM = potential early exercise before ex-div. The combos are redundant. A simple diagonal, could have the same R/R. It could be a choppy year and the thing works great. But at least as likely, the long straddle gains delta one way or the other and selling premium may start to become a bit one-sided anyways. @106 the short side is about 4.25 long side 17.25 mid. Little volume. As far as my experience with ratio diagonals, I like the strat in low IV and skew plays.