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HD is trading around 190. It has had a massive move to the upside in the last 2 months. Here’s the chart:
I am looking for sideways action to work off some of the ‘overbought’ conditions and rising 20-day moving average is around 185. That is my first support level on the downside. I am looking to sell an ATM Iron Fly, 10 points wide. Here’s what P/L graph looks like:
I will add another Iron Fly IF or WHEN price breaks outside of either 185 or 195. I will look to make about 15% return on margin and don’t want to risk more than 17-20%. This trade has 36 DTE and I’d like to be out of it in about 20 days.
Order Ticket Type Asset Duration Strike C/P Buy To Open HD 02 FEB 18 200 Call Sell To Open HD 02 FEB 18 190 Call Sell To Open HD 02 FEB 18 190 Put Buy To Open HD 02 FEB 18 180 Put Total Credit: $5.50 HD is trading at 197.84
We’re adding an ATM Iron Butterfly, centered around 197.50 strike.
Order Ticket Type Asset Duration Strike C/P Buy To Open HD 02 FEB 18 207.5 Call Sell To Open HD 02 FEB 18 197.5 Call Sell To Open HD 02 FEB 18 197.5 Put Buy To Open HD 02 FEB 18 187.5 Put Total Credit: $5.30 P/L graph:
I’m going to BUY TO CLOSE 180/190/200 Iron Butterfly here. This will leave 187.5/197.5/207.5 Iron Fly on with 15 days to expiration.
Order Ticket Type Asset Duration Strike C/P Sell To Close HD 02 FEB 18 200 Call Buy To Close HD 02 FEB 18 190 Call Buy To Close HD 02 FEB 18 190 Put Sell To Close HD 02 FEB 18 180 Put Total Debit: $7.80 – $8.00 P/L graph:
This trade has reached a point where it needs to be stopped out. I’m going to BUY TO CLOSE 187.5/197.5/207.5 Iron fly here
Order Ticket Type Asset Duration Strike C/P Sell To Close HD 02 FEB 18 207.5 Call Buy To Close HD 02 FEB 18 197.5 Call Buy To Close HD 02 FEB 18 197.5 Put Sell To Close HD 02 FEB 18 187.5 Put Total Debit: $5.30 P/L graph:
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