$BIDU entry today. Defined risk strangle ?

9dec update - today with stock at 115:

the short 110 put delta is at 31ish
the call credit spread 130/135 had .35 remaining in premium and the 130delta was at 12ish

I closed the call credit spread at .35 and resold a lower set of strikes 125/130. selling the 125 strike at 23ish delta gets me back to the delta I was targeting initially from the first call spread. the 125/130 spread sold at .76 so I gained an additional .41 in premium. again the profit goal is 25-50% of max profit like I noted below, will exit closer to 25% im thinking to free up the buying power for something else. lines on the chart show the breakevens at opex in January. note the lower breakeven would be below the 50day moving average.

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There might be a cool name for this trade but I sure don't know it. was either the Defined Risk Strangle or a Kind of Iron Condor.

my last blog post was the TSLA iron condor using the methodology of the Tastytrade guys. had a few minutes today to stream one of their live videos during market hours and the dude was mentioning BIDU and selling a strangle. In general I don't sell the naked strangle preferring to have a long DITM LEAP call already, so a Cash Secured Diagonal Spread Strangle I guess, like my AAPL position...long 2021/2022 DITM calls, sell upside calls (the diagonal spread part) and then also sell downside puts that are cash secured.

anyway,  the guy online is selling a strangle, Jan opex 52days out, the short put(110) and call(130) at about 20delta each. instead, using his strikes I was looking to make this an iron condor (105/110/130/135). the target premium for a $5 wide is 1/3 the width.. $1.67... was not getting it with the condor. remember my rule of only selling short puts on stocks I'm ok owning if I have to buy at opex… got me thinking what if I don't buy the 105 put. as in don't sell the credit put spread of the condor. still sell the call credit spread as usual to have the defined risk to the upside. by not buying the 105 call I save a lot of premium. so going off memory from this afternoon the 3 leg trade with stock at 119ish...

Sell the Jan2020 110 put at about 2.02 credit (delta 23)
Sell the Jan2020 130/135 call spread for .80 credit (130 delta 24)
stock IV of 52
Total credit received $2.82 for a one lot.

at expiration:
close at 135 or higher - max loss $2.18
close 110-130 - max profit the $2.82 I collected today
downside breakeven is - 107.18 (the 110 short put minus the $2.82 collected) and I have to buy the stock at 110.

note the Implied Volatility is at 52 which is high. Again, per the Tastytrade videos I've watched recently the objective is enter trades at / near 45 days out and take profits between 25%-50% of max profit, so $.70-$1.40 and/or with about 21days remaining. this is to take advantage of a decrease in the IV which means premiums go down which the position decreases in value (you buy back cheaper for a gain)

I'm more concerned with an upside move hence not selling a legit strangle with an upside short call with unlimited risk. the 135 call caps that risk. a down move below 110 is easier to manage IMO since I can roll out the short put for flat for more time or for time and a credit. going to keep lot size low until I can see proof of concept with my own experience first. so if things work as statistically expected that $2.82 amount should decrease a bit every day barring a significant move in either direction.

lines on the chart show the edges of the short put and call credit spread but will be looking to cash out prior to opex.