December Expiration M3

Hello everyone. Below I would like to share my December expiration M3 position as I have traded it so far.

October 20th: On Friday, 56 DTE like all the positions I put on, I started my position. Since the market was at 1509, I centered my butterflies at 1480. This is because of the guideline with M3 positions that the butterflies should be placed 20-30 points below the market. The butterflies had 50-point wingspans as usual. In order to offset the negative Delta, I bought a 1270 call. This call wasn't enough, however, and I bought a 1470/1480 vertical to bring the total Delta of the position to -5.

The risk profile graph of the beginning position can be seen below:

October 25th: After five days in the position, the Delta of the position became +28, and since the limit for positive Delta is 20, I had to adjust the position to bring it below 20. In order to do this, I moved half of my butterflies to 1460, 20 points below the original half at 1480. This adjustment brought the Delta of the position down to 11 and did not significantly affect the position's Theta or Vega values. If I had tried selling my vertical in order to correct the positive Delta, it would not have worked.

The risk profile graph of the first adjusted position can be seen below:

November 6th: Although all of my Greek values were within limits today, I chose to add a vertical at 1470/1490 in order to flatten my t + 0 line. This is something I often do when I trade the M3 because it flattens the profit (and therefore the risk) throughout the front portion of the curve which usually sags as time passes. Also, since the market has been relatively bullish over the past few months, having that extra protection in the front part of the position is reassuring. The position is currently profiting with $1590.

The risk profile graph of the second adjustment can be seen below:

Stay posted for updates on the December position!