OPENING: OIH JAN/APRIL 16/20 UPWARD CALL DIAGONAL

29 nov 2018

... for a 2.62/contract credit.

Metrics:

Max Profit on Setup: 138/contract
Max Loss on Setup: 262/contract
Debit Paid to Spread Width Ratio: 65.5%
Break Even: 18.62 vs. 18.60 spot

Notes: Taking a bullish assumption directional shot in OIH with plenty of time to work out/reduce cost basis ... . Will look at taking profit at 50% max.

1 dic 2018

Trade attivo

Rolling the 20 short call down intraexpiry to the 19 on continued weakness for a .23/contract credit; scratch at 2.39.

18 dic 2018

Trade attivo

Sometimes, you just kind of have to ... . Rolling the near worthless 19 short call down and out to the Jan 25th weekly 16.5 strike for a .25/contract credit. Scratch at 2.14. This isn't ideal, since the diagonal is a mere .50 wide with a .50 max profit metric should the underlying finish above 16.50 at expiry (versus the 2.14 scratch point). I'll naturally deal with that situation via some kind of roll should that occur ... .

21 dic 2018

Trade attivo

Rolling again ... . Down to the Feb 1st 15.5 (which is now the 30 delta in that expiry) for a .22/contract credit; scratch at 1.92. I would note that some traders will not do this with this type of setup. On original fill, the max loss was 2.62/contract and by flipping it over to a diagonalized credit spread, there is now risk in the spread (.50), which would be realized if price rips back through the 16 strike (where the long is parked), and I just sit there and do nothing like a big doofus ... . At this point, the way I look at the setup is akin to a covered call where price has caved dramatically, and you need to roll to a strike that is temporarily under your cost basis to keep yourself protected from further downside. You generally "fix" that situation later should price bounce into your short call by rolling out and/or up and out (assuming you want to stay in the stock).

27 dic 2018

Trade attivo

Going aggressive and rolling the 15.5 down to the 14 intraexpiry for a .40/contract credit to collect max extrinsic near at-the-money. Scratch at 1.52.