OPENING: /CL JAN 15TH 59/61 SHORT PUT VERTICAL
... for a 1.70 ($170) credit; scratch at 24.50.
Notes: Ordinarily, I wouldn't sell against in this short of duration, but here's my thought process behind doing this here: (1) The entirety of the January call side is subject to max loss with this up move. Since they're each one-wides, that's the equivalent of one three-wide. (2) Selling a two-wide brings in some credit, while representing a smaller max loss risk metric than currently exists on the call side in the event that price dramatically craters in the next 10 days such that the put side in the January cycle is subject to max loss (which my gut says probably won't happen, although you naturally never know). Perhaps more importantly, the credit collected to date exceeds the width of this spread by 4.50, although naturally some of this credit is attributable to spreads sold farther out in time. (3) Even assuming the worst case scenario (price implodes through the 59 long put strike) such that I can exit the entirety of the call side profitably, I'm left with a single spread to address, rather than three.
Notes: Ordinarily, I wouldn't sell against in this short of duration, but here's my thought process behind doing this here: (1) The entirety of the January call side is subject to max loss with this up move. Since they're each one-wides, that's the equivalent of one three-wide. (2) Selling a two-wide brings in some credit, while representing a smaller max loss risk metric than currently exists on the call side in the event that price dramatically craters in the next 10 days such that the put side in the January cycle is subject to max loss (which my gut says probably won't happen, although you naturally never know). Perhaps more importantly, the credit collected to date exceeds the width of this spread by 4.50, although naturally some of this credit is attributable to spreads sold farther out in time. (3) Even assuming the worst case scenario (price implodes through the 59 long put strike) such that I can exit the entirety of the call side profitably, I'm left with a single spread to address, rather than three.
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