IWM, DIA, NFLX Options Trades

I wanted to quickly recap a few of my ongoing options trades. My current and past options can be found here. In the future I’ll document each trade as its own individual post. Until then, I’ll update these as things change. Due to how the market had rallied and slightly bearish options, I am down overall. I hope the market cooperates and/or I’m able to manage them a little better and turn them at least into a scratch.


IWM
Type: bear call spread

05/27/14 STO 1 IWM Jun21 2014 115 Call @ 0.96
05/27/14 BTO 1 IWM Jun21 2014 116 Call @ 0.63
Comm = 3.07
POP = 67%
Credit: 0.33

This trade could turn out a few ways:

Max Profit $33 – $3.07 = $29.93 Max profit occurs if IWM is less than 115 on expiration day, which is June 21. Max Profit = Net Premium Received – Commissions Paid
Max Loss $67 + $3.07 = $70.07 Max loss occurs if IWM is above 116 on expiration day, which is June 21. Max loss = Strike Price of Long Call – Strike Price of Short Call – Net Premium Received + Commissions Paid
Breakeven Point $0 Breakeven point occurs at 115.33. Breakeven Point = Strike Price of Short Call + Net Premium Received

Update (6/19/14): Unfortunately, with the amount of time left in the option (2 days) it was unlikely that IWM would fall more than $2. Rather than risk an assignment fee, I decided to close the trade for a $0.95 debit.
My total loss on this option (before commissions) was $62.

06/19/14 BTC 1 IWM Jun21 2014 115 Call @ 2.54
06/19/14 STC 1 IWM Jun21 2014 116 Call @ 1.59


DIA
Type: long put diagonal (bearish trade)

05/27/14 BTO 1 DIA Jul3 2014 166.5 Put @ 2.13
05/27/14 STO 1 DIA Jun13 2014 165.5 Put @ 0.90
Debit: 1.23

DIA has an IV rank of 0% and is trading near all-time highs. My hope is that DIA sells off and that there is an increase in volatility before my short Put expires.

Update (6/11/2014): Instead, markets hit even bigger highs. I was able to buy-to-close my short Put for $0.05 and roll it out to $166 and June 21 for $0.31, a $0.26 credit. This brings my risk on the trade down to $0.97 (original $1.23 debit minus $0.26 credit for the roll) and gives more time for DIA to trade below $166.5.

Update (6/26/2014): Well, DIA is not cooperating. It closed the day at 168.08. On 6/17/2014 I rolled the June21 short put to Jun27 for a $0.31 credit. This roll brings my risk on the trade down to $0.66. And then on 6/26/2014 I rolled the short put out to Jul3, the same expiration day as my long 166.6 put, for $0.25. This will be the final roll and lowers the risk on the trade down to $0.41. So, if DIA does not drop substantially by expiration on Jul3, I’ll have taken a loss of $42, not bad considering I was risking $123 originally and the trade went in the completely wrong direction.

06/10/14 BTC 1 DIA Jun13 2014 165.5 Put @ 0.05
06/11/14 STO 1 DIA Jun21 2014 166 Put @ 0.31
06/17/14 BTC 1 DIA Jun21 2014 166 Put @ 0.27
06/17/14 STO 1 DIA Jun27 2014 166 Put @ 0.57
06/26/14 BTC 1 DIA Jun27 2014 166 Put @ 0.04
06/26/14 STO 1 DIA Jul3 2014 166 Put @ 0.29
07/03/14 puts expired worthless
Commission: 10.78

Total loss: $52.78


NFLX
Type: bear call spread

05/27/14 STO NFLX Jun21 2014 415 Call @ 8.19
05/27/14 BTO NFLX Jun21 2014 420 Call @ 6.66
Comm = 3.08
POP = 69%
Credit: 1.53

This trade could turn out a few ways:

Max Profit $153 – $3.08 = $149.92 Max profit occurs if NFLX is less than 415 on expiration day, which is June 21. Max Profit = Net Premium Received – Commissions Paid
Max Loss $347 + $3.08 = $350.08 Max loss occurs if NFLX is above 420 on expiration day, which is June 21. Max loss = Strike Price of Long Call – Strike Price of Short Call – Net Premium Received + Commissions Paid
Breakeven Point $0 Breakeven point occurs at 416.53. Breakeven Point = Strike Price of Short Call + Net Premium Received

Update (6/19/14): NFLX stock shot up huge. It is currently trading at around $442. The likelihood of NFLX dropping below $415 in less than 2 days is extremely low. Rather than risk having to pay an assignment fee, I’ve decided to close the trade for $501. When taking the $153 credit into account, this is a loss of $348.

06/19/14 BTC 1 NFLX Jun21 2014 415 Call @ 28.58
06/19/14 STC 1 NFLX Jun21 2014 420 Call @ 23.57


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