Adjusting option positions when under the sea

Have to thank $Sea Ltd(SE)$ for an under the sea experience. 

Entered short strangles at $45 put / $75 call pre earnings. With slight bullish position.

Thankfully, it's a strangle position, I have to salute those who are under the sea together holding sea shares. Likely will start selling sea shells by the sea shore. 

The fortunate thing about strangle position, despite the plunge, I technically lose money on the put side but earn money on the call side.

I closed the call for profit, open at $0.69 and close at $0.03 for a cool $0.66 returns exclude commissions.

However, the put position is down somewhere with SpongeBob square pants. 

Are the losses confirmed For the puts. Not yet though, the option expires on 15 sept. If by 15 sept, sea just recover to above $45. I am out of the woods, with the put premiums in my pocket. 1 more month to see how it goes. 

That is if my put dun get assigned in advance. What will happen if my put get assigned?

I will need to buy sea shares at $45. and the option contract value will get wiped off. In other words, my put premiums no longer matter. Despite the current plunge, sea at $45 it's not a terrible price To buy the stock. 

I can always sell back covered calls at $45 to sell back the sea shares at $45 while collecting call premiums. 

So for now, I am stuck with my put position at $45, with sharks swimming all over. 

I decided to add in some shark repellent. 

I sold $50 call with same expiry on 15 sept to form back another strangle. 

Collecting $0.53 in premiums pre commissions. What this does, is that it reduces the impact on further drop into the sea. 

However, doing so I convert a pure bullish position (naked puts) into slightly neutral and bullish position as my put is in the money and my call is out of the money. 

Why this move? [Cry]  cos I do not have faith that sea will recover fast. My ideal case will be by sept 15, sea is somewhere between $45 to $50. Both side of option will expire worthless. 

Since under the sea, might as well enjoy the underwater scenery. [Facepalm] 

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  • Sing Options
    ·2023-08-16
    TOP
    interesting you would do a short strangle during earnings. you were expecting it to trade within a range?
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    • Sing OptionsReplying toBonta
      roger that
      2023-08-16
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    • Bonta
      U are right. Intention is to capture move between $45 and $75. Additional bonus is to capture volatility crush post earnings, as usually volatility spike before earnings and drops post earnings. As long as no crazy move, premiums collected from iv crush is guaranteed.


      Under ideal case, earn from both novement within range and iv crush.
      But well, shit happens when there’s major move up or down. Thats the current situation. Then become have to manage the positions.
      2023-08-16
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  • NYY123
    ·2023-08-15
    TOP
    Short strangle shouldn't be used if there's high price volatility. Your hedge won't be able to cover your losses
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    • Bonta
      In traditional sense strangle is not meant for directional. It is always meant to be a neutral strategy. Hence i do agree with u that hedge will not be able to cover as long as theres any strong directional move. Which is the case for sea. I catered for a 20% move down, which sea still burst my provision.


      Gd thing about these volatile stocks is that, the option deltas catered for that and the range is a lot wider.


      If i want to avoid taking the loss, either let it assign and sell call options or roll puts until the stock moves above $45.
      2023-08-15
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  • BillionaireN
    ·2023-08-16
    TOP
    Same same all my puts on sea enjoying the view under water …..
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    • BillionaireN
      Let ride it out togther bro
      2023-08-16
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    • Bonta
      [Comfort]
      2023-08-16
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  • BillyWilliams
    ·2023-08-16

    Most of the panic today should’ve already been priced in. This is too much.

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  • Bonta
    ·2023-08-16
    @TigerStars [Bless][Bless][Bless]
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  • WayneEvans
    ·2023-08-16

    feel sorry for SE investors 🕯️

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  • BruceBryant
    ·2023-08-16

    EOD hype will Collapse tomorrow.

    SELL.

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