Sunday, October 04, 2015

Twitter Update #21

Oct 1

Analysis

With expiration approaching on Friday, I need to move some positions around into the following expiration. Volatility picked up slightly in TWTR this week with significant upside and downside swings.

With volatility high, I have elected to purchase a slightly unbalanced butterfly. This makes the cost cheaper, but does not provide the immediate protection compared to the put spread.

Trades

Part 1 - Roll out short call
+2c TWTR Oct 2' 25.5 Call @ 1.02
-2c TWTR Oct 9' 26 Call @ 1.04
Net Credit 0.02/c

Part 2 - Sell out put spread and purchase a butterfly for 1 week
-2c TWTR Oct 2' 25 Put @ 0.28
+2c TWTR Oct 2' 23 Put 0.02

+2c TWTR Oct 9' 25 Put @ 0.72
-4c TWTR Oct 9' 23.5 Put @ 0.26
+2c TWTR Oct 9' 21 Put @ 0.05
Net Credit 0.01/c 

The position is long a 25-26 collar for no debit. The position can gain a maximum of 1pt/c and is fully protect down to the 23.5 strike.

-End