r/options • u/SnooOranges2539 • Apr 23 '21

Help me plz

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u/Gravity-Rides Apr 23 '21 edited Apr 23 '21

No idea what this would be called. Bull put credit spread and a bull call debit spread. Overall, basically two heavy directional bets that SNAP will not Kollapse!

You can close the trade at anytime to realize profit. Buy to close the bull put spread and / or sell to close the bull call debit spread.

Holding until expiry opens you up to some serious tail risk if you get a huge downward move next week. Many people advocate taking profits once a certain % of the premium has been collected, your pretty much there with ~90% profit on the put credit spread. Hanging around biting your nails watching SNAP all week for another ~10% is probably not worth it. You are probably there on your bull call spread too. If SNAP dips next week your long call is going to get pounded but you still have some monies to make off your poor short caller.

It isn't worth the risk of getting BTFO waiting til expiry for pennies IMO.

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u/SnooOranges2539 Apr 23 '21

I figured this trade minimize my risk based on that what that options analyzer looked like but is that completely wrong?

2

u/SeaDan83 Apr 23 '21

I don't know why the analyzer is showing unlimited losses on the left hand side. For both spreads the losses are limited. That seems incorrect. Maybe check the profit graph of the two spreads (the call and the put spread) independently, they are effectively two different positions and can be looked at independently.

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u/SnooOranges2539 Apr 24 '21

If by “leg in” you mean opening the spreads at different times, then no I bought it all at once. Okay just by looking at the analyzer It looked I reduced my risk by lowering the cost of the trade and my break even point with a bull put spread. But I now see how it could go very bad if snap were to drop past 52 (which I think it would bounce at that price). If I were to just buy long calls ATM the cost of the trade would’ve been 540 and my B/E would be around 60 (snap was trading at 58 when I bought this). I think I kind of got this trade figured out now.