Tuesday, August 04, 2015

Twitter Update #8 - (Stock Purchase)

Aug 4

Analysis

TWTR appeared to bounce a little and stopped moving down. One of the butterfly hedges was sold and extra shares bought with the proceeds from the sale.

The position is still protected by a further out butterfly and two sold calls in case the market continues to drop for this week.

The position is down nearly 750 carrying 209 shares of stock due to the large drops in share price. Without hedging, the position would be down over 1170.

I am going to continue hedging the position every week or every two weeks in an effort to capture value from the butterfly hedge. I will be looking at wider butterflys or wider put spreads to mitigate further losses.

Trades

Sell the butterfly
-2c Aug 7' 31 Put
+4c Aug 7' 29 Put
-2c Aug 7' 27 Put
Net profit: 0.85 - 0.495 = 35.5/c

Purchase +2 shrs TWTR @ 29.66

-End

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