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closed Positions
ewz: 05.28.20 – 09.18.20
ETF | Brazilian Equities | Status: Closed
Adjustment #2
View original trade
07.31.20
EWZ just does not want to drop. Luckily I don't have much risk in this trade so I'm willing to battle it out. The share price is too high for me to be able to the entire position for a credit. What I've decided to do instead is close my for near max profit on both, and sell a single short put in the September I'm leaving my alone in Aug to avoid paying the high of the September cycle.
This maneuver allows me to improve my which reduces my max loss by the total credit I received for the trade ($0.39), eliminates my risk to the downside completely, and gives me until August expiration to finally be right. In exchange, I have a lower profit potential but a much higher probability of achieving the maximum. If EWZ continues to rise, my September put will decay completely and I'll take a net loss on the position. If EWZ finally falls, I'll be able to make some money back. If it falls below my short put, I'll have the opportunity to take profit or make another adjustment to the trade.
In summary, I've paid a total of $3.34 for this position. The maximum I can ever sell this spread for is $6.00 if EWZ shares are below $27 on September 18. Therefore my maximum profit potential is $2.66 ($6 - $3.34). My maximum loss is $3.34, but I've already lost most of that amount. I only have about $1.14 left to lose. This adjustment just buys me a little more time to see if EWZ falls back down to a level I can work with.
Please note that by placing my short put farther out in time than my my risk is is not technically covered. Therefore, this strategy is still being treated as a even though the long offsets the risk of the short.
Risk Profile:
Strategy: Close AUG Short Puts, Sell SEP Put
btc 2 aug 21 24 put
sto 1 sep 18 27 put
Fill Price: $0.39 credit
Position Analysis
U/L Price: $32.36
IV: 47.2%
IVR: 20.4
Liquidity: 4/4
Position: AUG 21/SEP 18 27/33 Long Put Diagonal
POP: 21%
Cost Basis: $3.34
Risk: Defined
BPR: $980
Max Profit: $2.66
Max Loss: $3.34
Target P/L: $1.15
Break Even(s): $29.66
Extrinsic Value: $49.00
Net Delta: -40.22
Net Theta: -1.463