Friday Trade Adjustments, Plus One New Trade

• stevenplace
• October 29th, 2010

This is going to be one big post of adjustments that need to be made on current positions.

AAPL

Our double calendars continue to stay weak as we haven’t seen a strong “break” out of the post earnings range.

We originally bought the AAPL 290/340 double calendar for $7. After earnings, we rolled out our short strikes to the next week for a .5 credit, so our basis is now 6.50. The current strangle buy is worth 3.80, so we have a ways to go to repair this position.

So what we will do is:

1. Close out the front week options for a profit

2. Sell the Nov(1) Weekly 290 put against our position for 1.10.

This will reduce our basis down to 5.40. If AAPL drops next week and pins 290, we’ll see a profit, and if it runs higher we will sell the 340 weekly calls against, *or* we can roll the current 340s down a strike or two and then sell against.

CRM

This stock has the potential to continue its run up into 52 week highs. As we have short gamma, we don’t want that to happen. So we are going to take a “breathing room” hedge against our position.

1. Buy back the put spreads for a profit.

2. Buy 1 Nov 120 Call

This will make our risk look like this:

This is only a temporary hedge. If CRM rips higher, we will take profits on the call buy and roll our bear call spread to higher prices, while establishing a new bull put spread, effectively rolling our iron condor. If CRM runs lower, we can leave the trade as is and get out with a mild profit, but we will take off the call before the theta really kicks in.

NTAP

We are going to sell -50 shares at market, reducing our current delta on the name to +30. We will re-add the shares on any pullback, but maybe they’ll get bot out by CSCO or whoever for a huge premium monday so we won’t have to worry about it :)

OIH

This is a new trade. We are going to assume that the 52 wk highs will hold, and the previous support at 110 is going to hold.

This puts oru breakevens at 128 and 109. Here they are on a daily chart:

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