Seeking Fly experts

Discussion in 'Options' started by insaneinvestor, Sep 12, 2007.

  1. What would you do?

    If you bought a 800 / 810 / 820 fly on the RUT a few weeks ago (as the first wave of the triple top was forming) for 0.75

    And you wanted to get out since the day you bought in.

    The B/A is getting closing in on your $1.15 exit price (reduced from $1.45 originally)

    Oh yeah, it expires in about 9 days.

    Was this a good play to beginning with and the RUT simply did not preform the was it was anticipated or was it something that would not have produced profit from the start?

    Please only comment if you have made profitable flies before. (This is my second attempt).

    Thanks
     
  2. Anything that makes money is a great play.
     
  3. Then this is not a great play.

    Anyone wanna buy it?

    Should I get out and take what I can or wait another day or two and try to get more?
     
  4. ajna

    ajna

    You bought a 10 pt fly for 0.75. If your opinion of where RUT lands in the next week has changed then go ahead and sell the fly for a small profit. If you still expect RUT to move into your range and you would still consider buying the fly at the current market price, then continue to hold it. IE, it depends on your expectations over the next week.

    Personally I find trading otm flys tough. The underlying either moves through my range too fast or avoids it all together. But if it earns, then good for you.
     
  5. Thats is what I am unsure about... the price action of a fly with less than 7 days.

    I see the RUT going close to my favor, but I have never held onto an option with less than 7 days to expire.

    I guess I may just call it a lesson and see what happens.
     
  6. Just have a look at your pricing model to see how your fly will perform when you:
    1. adjust time to expiry
    2. incr/decrease volatility
    3. adjust price of underlying
    4. combination of the above
    Cheers
    db