Pete’s Options

11/2/09 – JPM got hammered last night – and so I have decided to put a butterly on it using calls and setting it up slightly bullish.  I am looking at the possibility that the price might not fall much further from here, and may even rise, so the falling volatility and more stable/rising price will give me the profits.  On the other hand, I could be wrong, in which case I will exit and take a loss.  I have put the trade on for a cost of $1.31 which is the maximum loss I can suffer, with 38 days to go.

17/2/09 – The price of JPM fell to below $22.30 last night (which was my trigger), so I had an order filled to close out the long call vertical in an effort to minimise my potential loss on this trade, while leaving on the short call vertical to hopefully giving myself a chance to still profit from the trade as time decays.  The long 26/21 call vertical I sold for $2.12, leaving me with a net credit for the short vertical of $0.81 with 31 days remaining.

4/3/09 – Closed the remaining 31/26 calls for a $0.25 cost – this gives me a net profit of $46 (35%) which is a good result given what happened.  I liked how I managed this trade, and I think I will try a couple more of these types of butterflys – this might be my next “comfy chair” type trade!

6/9/08 – I have also decided to dip my toe in the water with a little speculative call butterfly.  This one cost me $1.40 (giving a max risk of $140 over 45 days) and has a potential max profit of around $1800 – although I would hope to get out for a fair bit less than that!  This one will only work if there is a rally in the next few weeks, meaning volatility will fall and the RUT will move up giving me some profit here.

15/11/08 – This butterfly is obviously not working out for me!  But just in case something amazing happens in the next few days, I have closed the short vertical (690/670) for a cost of $0.05 leaving me with the long vertical as a lottery ticket.

21/11/08 – Allowed the remaining contracts to expire, as it is not worth closing them.  Total loss was $152 over 47 days.