Adding Verticals to April Position

           Today, I switched back to OptionVue to conduct my trades on. Surprisingly, as I went into the BackTrader mode and put in the position as I had before, I saw very different Greeks and would have likely not put on the same position (the Delta value was around -17 which is too much negative Delta to start off a position). Noting this, I continued to simulate the position as I had over the past two weeks and I adjusted the position again.

           I made this adjustment because the market is currently sitting outside of my tent but the position has an overall Delta value of -75. Because the limit for the position outside of the tent is -50, I had to add verticals. I sold three calls at 1050 and bought three at 1030 in order to make the overall Delta -49. I did not want to add too much positive Delta because the market could always reverse and if it does so, not only would the negative Vega value hurt the position but the Delta would start to also. Currently, the Theta value is 98.9, the Vega value is -170.9 (with the addition of the verticals) and the Gamma value is -0.64 (also something to watch, especially as the trade approaches expiration).


Of course the risk profile graphs are also going to be from OptionVue also.

Moving the Butterfly

         Over the weekend, because of the continuous bullish movement of the market, I had to adjust my position. The main reason was because my Vega value became positive, so in order to change it back to negative, I moved the butterfly from 1010 to 1040. The position I had to remove I took a loss. At the time, I was down about $950 but now the position is down about $1,367. While this may seem like a large loss after only a few days of implementing the position, I am not worried. The market has been bullish for the past two weeks and has risen 16% in only 16 days, a trend that is incredible. My position is ready for the market to retrace a percent or two but if it opens 3-4% down tomorrow, I may need to adjust the position again.

        Currently, the Greeks are all within their limits. The Delta value is -25.8, the Theta value is 48.8 (which will continue to build) and the Vega value is -55.7, all of which as suitable for the position.
Below is a picture of the current position and t + 0 line. I hope you all are enjoying this blog and don't forget to leave any questions or concerns in the comments.

Starting the Blog Again

         Hello Again! To start off, I want to apologize for being so quiet on the blog over the past few months. Over the next few weeks, I plan on restarting my updates continuing to put on live 'fake' trades. I will try to keep up to date while posting to the best of my ability but it is possible that I will miss an adjustment or two if I am busy. One thing to note is that I am now putting on my positions on the Think or Swim platform rather than OptionVue. This should not affect anything greatly but be ready for different colored charts.

       Yesterday, I put on a butterfly hedged with a call, just like I had been doing before. The butterfly was bought for the April expiration date which was 45 days but shouldn't be a major issue. I bought the butterfly at the 1010 strike price and my wings (remember they are 50 points wide) are located at 1060 and 960. The Delta of the butterfly came out to be about -76 so I bought a call with a Delta value of 70. Currently, even though the market is still fluctuating, the values of the Delta for the butterfly and the call are -90.12 and 80.56 respectively. The current position is down about $228, probably because of the 1.5% rally today right after I put on my position.

I am excited to continue doing this blog and am ready to continue expanding my knowledge of the options market!

Moving the November Butterflies Forward and Adding Verticals

     Sorry for not posting in a while, I have been really busy with school. Anyway, my November position was doing fine until the sudden rise of the market in the past few days. By yesterday, my position had positive Vega, negative Theta and a high Gamma value as well. Since I wanted to fight the market and the overall position was still okay, I decided to move my butterflies up to 1150. Before the adjustment, the risk profile looks like this:

After I moved the butterflies up, the position had a a negative Vega value, a positive Theta value and a lower Gamma value like an ideal position should have. The position now looks like this:

Today, after the market rose another 0.5%, the market was outside of the tent of the butterfly and the Delta value was -78. The rule for negative Delta outside of the tent is -50 so I added two verticals at 1160 and 1140 to make my Delta -57 which is close to that of the rule. The Theta and the Vega of the position increased (Theta became more positive and Vega became more negative) and the position now has a nice t + 1 line. The position with the verticals added looks like this:

Added Verticals to November Position

       On Monday, I had to adjust my position because of too much negative Delta. I put on two verticals at 1120 (buy) and 1130 (sell) and was able to increase the Delta value to above -50, following the rules of the M3. As of today, I am at a profit of $1,061 and my Greeks are: Delta is -24.37, Gamma is only -0.24, Theta is 148.2 and Vega is -318. The position is 30 days until expiration so I am in no hurry to take the position out, especially since my t + 0 line have a nice, flat line.

This is what the position looked like after the verticals were added:

This is the risk profile of the graph today:

November Position Update

     Late last week, I moved my butterflies from 1,070 up to 1,110 where the position was originally initiated. This is because of the rapid move back up from 1070's to where it is now, at 1,164. Also, my Greeks were a bit off, meaning my Vega had gone positive at about 164. My Theta was also at the edge of going negative at only 4. Overall, it was a risky position. As of today, my Greeks are all within their limits and the position if up $476. The current risk profile graph looks like this:

Starting and Adjusting of the November Position

       The past few days have been extremely busy for me so I apologize for not updating. Last Friday, I put on my November position. The butterflies were placed at 1,110, about 30 points below the market position of 1138 at that time, like I normally do. The one thing I had to do differently while putting on the position was buying 16 butterflies instead of 10. I was forced to do this because if I had just put on the 10 butterflies like usual, the call I would have had to buy in order to offset the Delta would have been closer to the money than I would have been comfortable with.

       On Monday, since the market dropped so substantially, I had to move my butterflies back. The overall value of the Delta was 55 and since the rule is to sustain it under 50 I had to adjust it. The position as of Monday night after the adjustment is at 7.34 Delta, 96 Theta (slight decrease in the Theta after adjusting) and -356 Vega which became largely more positive. This is not something I am worried about since it will become more negative as time progresses. The risk profile graph looks like this:

         I did not adjust the position the rest of the week since there were no there drastic changes. The positions current Greeks are: -7 Delta, 123 Theta and -391 Vega. Currently, I am only down about $70 as opposed to being down about $700 on Tuesday after the market was down again. What is interesting is that if I hadn't adjusted my position at all on Monday, I would have been up over a thousand dollars. Of course this is unrealistic since I will always adjust my position based on the given rules. The position as of today looks like this: