Condor Options

As the trading week draws to a close, we’re making one last adjustment ahead of the weekend. We’re closing half of our second butterfly hedge position, with the following order:

Day limit order
Sell to open 1 SPY Nov 125 put
Buy to close 1 SPY Nov 117 put
for a net credit of $1.02† or better.

Note, again, that 1 contract represents half the number we traded in the wings of this position (half the number of contracts currently long at the 111 strike). We’re planning to let the short 111/117 put vertical this trade leaves behind from its share of the position expire. For anyone wondering, closing this position results in reopening the short position at 125 that was part of our initial double-diagonal position—which is why we have “sell to open” at the 125 strike.

In addition, note that anyone who does not have enough available margin to keep the short 111/117 vertical open will have to close this portion of the entire butterfly. The current mid-price for selling the Nov 111/117/125 put butterfly is about $0.95 (credit). The official newsletter position, however, will continue to show the short vertical, with P/L and total risk based on the official trade above.

Here’s our new P/L graph, with the simulated curve at expiration, since we have so many vertical spreads that will (we hope) expire worthless.

†Average fill price.