Trade Idea: SOFI August 20th 2x15 Long Call/20 Short Call Ratio
Updated
Here, looking to potentially get into this underlying on weakness with a high long delta setup while not spending a lot of buying power doing it.
Unfortunately, the strikes aren't as granular as I'd like with my general standard setup for these being (a) buying 2 x 75 delta; and (b) selling a 1 x 50 delta, resulting in a net delta long metric of around 100 so that the setup behaves like long stock and such that the short finances all the extrinsic in the longs. Nevertheless, I get close delta-wise to what I'd like to see out of these and get a break even close to where the underlying is currently trading.
Metrics:
Max Profit: Theoretically Infinite
Max Loss: 5.88 ($588)
Break Even: 17.94 versus a Friday close of 18.08
Delta/Theta: 110.26/-.60
Long Call Vertical Aspect Max Profit: 2.99 ($299)
Generally, I look at these setups in two parts: (a) A standalone/extra long call; and (b) A long call vertical. The reason why I do that is that the long call vertical -- consisting of one of the 15 longs and the 20 short -- has a max profit metric, and if I get the move I'm looking for (which would be a move through $20), I want to potentially take profit on that aspect of the setup. There is, after all, little point in hanging onto a position that is converging on max profit, since you can't make any more money on it (but can naturally still lose money on it).
Given the duration I've got to work with (around 45 days), I could also consider doing a money/take/run on a print that is a function of the long call vertical's max (e.g., 25% of 2.99 = .75, which wouldn't be all that bad of a return on capital -- 12.8%).
Additionally, if I get a monstrous move (e.g., to the top of the range at $25+), I can consider not only peeling off the long call vertical aspect in profit, but also selling another call against that is higher up the ladder and against the "extra" 15, converting the remaining part of the position into a second long call vertical with its own max profit metric (and improved break even).
Lastly (and again assuming a big move), I can pull off the long call vertical on approaching max, ride the extra long and then proceed to exercise it for shares and then sell call against, converting it into a covered call, assuming I want to tie up the buying power in a full one lot at that point in time.
Unfortunately, the strikes aren't as granular as I'd like with my general standard setup for these being (a) buying 2 x 75 delta; and (b) selling a 1 x 50 delta, resulting in a net delta long metric of around 100 so that the setup behaves like long stock and such that the short finances all the extrinsic in the longs. Nevertheless, I get close delta-wise to what I'd like to see out of these and get a break even close to where the underlying is currently trading.
Metrics:
Max Profit: Theoretically Infinite
Max Loss: 5.88 ($588)
Break Even: 17.94 versus a Friday close of 18.08
Delta/Theta: 110.26/-.60
Long Call Vertical Aspect Max Profit: 2.99 ($299)
Generally, I look at these setups in two parts: (a) A standalone/extra long call; and (b) A long call vertical. The reason why I do that is that the long call vertical -- consisting of one of the 15 longs and the 20 short -- has a max profit metric, and if I get the move I'm looking for (which would be a move through $20), I want to potentially take profit on that aspect of the setup. There is, after all, little point in hanging onto a position that is converging on max profit, since you can't make any more money on it (but can naturally still lose money on it).
Given the duration I've got to work with (around 45 days), I could also consider doing a money/take/run on a print that is a function of the long call vertical's max (e.g., 25% of 2.99 = .75, which wouldn't be all that bad of a return on capital -- 12.8%).
Additionally, if I get a monstrous move (e.g., to the top of the range at $25+), I can consider not only peeling off the long call vertical aspect in profit, but also selling another call against that is higher up the ladder and against the "extra" 15, converting the remaining part of the position into a second long call vertical with its own max profit metric (and improved break even).
Lastly (and again assuming a big move), I can pull off the long call vertical on approaching max, ride the extra long and then proceed to exercise it for shares and then sell call against, converting it into a covered call, assuming I want to tie up the buying power in a full one lot at that point in time.
Note
Filled at the open for 5.79 ... . :-). So the max loss will be 5.79 with a break even of 17.90.
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