[email protected] said:
Hi Harish and Natilus,
For a great learning, I would like both of you to do one small exercise and post it here, please. Figure out the trade position in terms of profit and loss assuming options expired today. This exercise may be difficult one, I don't know, you will find out. I encourage all the readers to do this exercise also, of their own, and they are welcome to post it here too, if they so desire.
It is very essential to do this exercise, without which no one can tell where the trade will lead you. If you know in advance where the trade will lead you, than you can take corrective steps now, while the time is still in hand.
Good Luck,
Wastej
For a great learning, I would like both of you to do one small exercise and post it here, please. Figure out the trade position in terms of profit and loss assuming options expired today. This exercise may be difficult one, I don't know, you will find out. I encourage all the readers to do this exercise also, of their own, and they are welcome to post it here too, if they so desire.
It is very essential to do this exercise, without which no one can tell where the trade will lead you. If you know in advance where the trade will lead you, than you can take corrective steps now, while the time is still in hand.
Good Luck,
Wastej
I will have a stab at it and stand corrected in case of errors in my assumptions and calculations:
Assuming options expire today we would have the following trade position in terms of p/l.
1) 2000 long puts(sp2340) @46 would expire worthless resulting in a loss of
92000.
2) 200 short calls(sp2480) @21.55 would settle at 60.05 (current price) resulting in a loss of 7700
3) 400 short puts(sp2350) @12.50 would result in a profit of 5000
4) 1000 short puts(sp2400)@11.50 would result in a profit of 11500
5) 200 Long futures @2455 would settle at 2527 (current price) resulting in a profit of 14400
6) Plus closed out profits so far on futures 67200
Total loss = (67200+14400+11500+5000-92000-7700) = Loss (1600)
I will hazard a guess at the corrective action:
1) Close out the short calls(sp2480) @ 21.55
2) Sell 300 puts (any strike price) @ 6 or better
Phew!!! waiting for the brick bats!
Nautilus
1) Cover short puts(sp2480) @ 21.55