Maybe I wasn't specific enough in my original post. My position is long one 52.50 call, short two 55 calls, and long one 57.50 call. That's a long call butterfly, according to Investopedia and many other sources.
Ignore him. He doesn’t know that which he speaks. Nice trade but I think you got better odds in other structures that gave more protection in the three scenarios: Elon can walk away, Elon could renegotiate, deal closes on terms. At least that’s what I saw.
I think you mean an iron condor. No worries, there's a way to remember the terminology... Getting shot in the chest helps you to remember terminology discipline...
No there is a such thing as an iron butterfly which does involve puts. It's different from iron condor. https://optionalpha.com/learn/iron-condor-vs-iron-butterfly
I was listening to the music while I was reading your link. It did not help. I am hopeless. I will never understand options, ever.
The complete history is a little more complicated. Prior to July, I had never traded Twitter, and I was never a big fan of the company. In late July, the deal was in limbo. Musk was trying to back out, but Twitter had filed suit to force him to complete the deal, and more than one neutral legal expert had expressed the opinion that it was unlikely that Musk could break the deal or even renegotiate. The trial had been set for late October, and the judge had denied Musk's request to postpone it. On July 21, amid the uncertainty, the stock was trading at about 40, and I decided to bet that the deal would go through, before the trial date in late October, either at the agreed-upon price of 54.20, or at some other price well above 40. On July 21, I established a synthetic long position at 40 for a net debit of .45, with an expiration of 11/18. This was a single contract, i.e., long the 40 call and short the 40 put. In early October, Musk announced that he was prepared to complete the deal, on the original terms, but again asked to delay the trial, in order to put all the financing in place. Twitter clearly did not trust Musk, and thought that he might still be trying to escape by claiming that he couldn't get adequate financing, so they wanted to continue with the trial. Musk fired back in a court filing, claiming that Twitter "will not take yes for an answer." The judge finally put the trial on hold to give the parties time to actually complete the deal. The stock went up as high as 52 for a couple days, and then fell back to 50. At this point, on October 11, the synthetic long position was behaving exactly as it should. With the stock at 50, the synthetic was worth 10 points, or $1,000. I decided to close the position. That same day, I established the butterfly, to try to capture the remaining movement from 50 to 52.40, and that is exactly what has happened. I put on the butterfly with 10 contracts, for a net debit of 1.30, or $1,300.00. And for the butterfly I chose the December expiration. Why, you may ask, did I not simply hold the synthetic position? If I thought the deal was going to go through at 52.40, why not just keep the existing position? Because I wanted to limit my exposure. The synthetic had a very attractive gain of $1,000. But if the deal collapsed, that gain could easily evaporate, and the stock could very well drop below 40. On the synthetic long position, the max loss was, at least in theory, $4,000, because Twitter could declare bankruptcy and the stock could drop to near zero. With the butterfly, my max loss was $1,300. But since I had already pocketed a gain of $1,000 from closing the synthetic, my real exposure, on the whole affair, was now only about $300. And the butterfly also allowed me to push the expiration out to December, in case there was a further delay in closing the deal. When the long calls I am holding cash out at 1.70, my net profit on the whole thing will be $1,346.97, which is almost the same as what it would have been if I had held the synthetic.