Overall, a good setup call but if I were you, I would've done a sort of a variation of a collar by either replacing the long call with the strike of $57.50 with a put with strike of $50 or less for your long butterfly or add it to your first synthetic call if you really want to cover all scenarios especially the scenario where the deal doesn't go through. Normally I wouldn't recommend shorting naked calls but in this case because of the extreme special situation where there is a fixed price for the takeover of $54.20, there is virtually no chance that the share price would go over the short strike of $55 so having an extra uncovered short call at $55 is not too bad once you replace the second long call with a long put. There are only two scenarios with this merger: the deal doesn't go through or the deal goes through but in either case, the second long call with a strike of $57.50 imo is redundant. If the deal goes through, the maximum price Elon will pay is $54.20 so there is no way the price will reach $57.50 so that option will expire worthless regardless and the purchase price spent on that option is a sure loss. In the scenario where the deal doesn't go through, then this 2nd long call is even more redundant. But if the deal really doesn't go through albeit highly unlikely, having a long put will protect you much better than the two short calls if and once the price starts to free fall. So for the same net profit that you would end up having, you would get the extra protection from the put should something happens to the deal. I personally would sleep better with that protective put there.
Overall, you traded it better than I did. Once October 11th hit, the market was pricing something like a 20% chance of the deal closing vs deal absolutely busting. With a call structure, you miss out on the chance that he was able to negotiate a lower price. Albeit this scenario was low at the time, it was definitely higher than the deal completely busting by october 28th.
Special dude, He wasn’t long a synthetic call from inception. He was long synthetic shares from 40.45. The 57.5 call vol was trading at deal-certainty (10 vol?). The OP can trade a long call fly for a tiny premium over shorting the call backspread/ratio write and not carry any margin on the backspread. Just stop. Go read a book. It will keep you from writing these special missives.
Or buy a put to give back $3 to the mkt. The fly was fine. My GF Dawn needs to stop with the Dunning Kruger diarrhea.
No, what I want to ask is that Microsoft and Activision acquisition option play. It seems the gap is 20 bucks. Food for thought.
I think the fly gave up one outcome but otherwise I agree. the fact that he got premium for the 55 call was a big miss on my part.
I think Manhunter is one the best films of the twentieth century. But many people have never heard of it, and they don't understand how it is related to Silence of the Lambs.