New Trade : GES

New TradeStock / Symbol: GUESS? / GES

Option Strategy: long condor

Price at trade post: $26.40

Reasoning: With the news out following this stock's earnings last week, we're going to put on a low risk / high reward delta neutral long condor trade here . With 0 net Delta and positive net Theta, this is a non-directional trade allowing us to capture premium erosion with the stock trading between [private_monthly] 25.40 - 27.60 by Sep expiration. Given the low risk on the trade, we'll likely just exit the trade if our stops are triggered. [/private_monthly]

Trade Details:[private_monthly]
BTO 2 GES Sep12 25 call
STO -2 GES Sep12 26 call
STO -2 GES Sep12 27 call
BTO 2 GES Sep12 28 call
for a max net debit of $0.40 per contract (day order, limit order). Try to get filled closest to the mid, currently at $0.35. If not filled today, ok to try again tomorrow.

Requirements:
Cost/Proceeds $80.00
Option Requirement $0
Total Requirements $80.00
Estimated Commission $12.95

Max Risk: $80
Max Reward: $120 or 150% between $26 & $27 by Sep 21
Profit Range: $25.40 to $27.60 by Sep 21
Suggested Upside stop: @ $28
Suggested Downside stop: @ $25
[/private_monthly]

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Comments

  1. Thomas Reeder says:

    I’m new to options and I’m still trying to wrap my mind around the effect of time but so far this Condor on GES has been spiraling down. Do you have any exit strategy? It’s been down as much as 30% today. Should I just ignore it and let the trade run it’s course?

    Thank you for your advice, and hand holding.
    Tom

  2. Tom,

    This trade is still in a pretty good spot. The overall delta is 2.50, which is essentially neutral. The overall theta is 1.94, meaning that that the trade is currently taking in $1.94 per day as the options near expiration.

    We could get complex on this trade and adjust if/when our stops are hit but we’ll probably just exit for a slight loss if the stops are hit. The current stops are at $25.43 to the downside and $27.58 to the upside. If we’re stopped out, the loss will be around $30. The full profit potential on this trade remains at $114 or roughly 132%. We’re looking to get out of the trade for around a 50% return in the final expiration week.

    Mike

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