This is a neutral trade with no risk to the upside. Its like a straddle with protection to the upside, then selling a ratio spread to move our break even down (Doubling our risk to the downside) The trade is called a spiked lizard by Liz and Jenny. The expected move is around $3 and we have an IVR of 60. With an expected 40% vol crush, lets see how this trade goes. Our Break even is at 64.93 The trade: -2 65 Put +1 66.5 Put -2 69 Put +1 71.5 Put
We got $0.11 credit. Max profit is $261.
Transakcja zamknięta: osiągnięto wyznaczony cel
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Another earning winner this season. So far 8 winners out of 8. Let's see how it goes today.
The Straddle with protection to the upside would be (-1)69 Call/ (-1)69 Put + (+1)71.5 Call. The synthetic trade of that one is selling (-2)69 Put/(+1)71.5 Put. Its the same trade, the difference is that by using all puts instead of calls and puts I can add the Ratio spread "(+1)66.5 Put/ (-2)65 Put" and send everything in just one trade.
Hope that helps.
rockgy
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@AlexanderGotay, OK, understand now. Thanks for the explanation.
Hope that helps.