Wednesday, April 18, 2012

$FFIV credit put spread entry 4/18/2012

19Apr- after an initial selloff the stock recovered and moved into the 130's..about where options had it priced in.. took profits this morning.

Buy to Close Apr105/110 credit put spreads at .05x10 =$50
Profit= $650


18apr -have posted that i would do this trade for 3 weeks. again, this is the exception to not entering credit spreads prior to earnings. reason i am doing this nowis that i have diagonals on it as well.. that would be a DITM LEAP and have an APR 115 short call.. will keep the Leap no matter how it moves so i ignore that part of diagonal.. as of this second the 115short call has $10 left, alot of it is the IV increase into earnings of course. That $10 from the short call becomes an added hedge to a credit put spread position.. consider it the same as if you had an iron condor..the call credit spreads hedge the puts.

Sold the Apr 105/110 credit put spreads at .70 x 10 =$700 credit

the 110/105 spread lines up with what would be a gap fill if it drops on earnings, also lines up with the 150day moving average.

- stock moves up then put spread profits and i roll short call to May and look at May credit put spreads
- stock between 110-115, i keep the $1000 from short call and put spreads profits, sell another short call for may, and look at May credit put spread lower
- stock below 110, roll credit put spreads down and out to may, keep the $1000 from short call, sell another short call or a call ratio spread for may