8-th Option Combination 2012

[Options-trader 10]

I propose you to observe the process of my next option combination conducting.

Size of investment for one combination is 50,000$. For purchase straddle i put no more than 2/3 total amount of investment. The remained sum is necessary for management of a combination.Today i opened long straddle of CAT (Caterpillar Inc.). It has been bought 42 contracts of NOVEMBER'12 92.5 CALL ($3.15 ) and 42 contracts of NOVEMBER'12 92.5 PUT ($4.60). In purchase it has been spent: 7.75*100*42=$32.550. Further i will conduct the combination.

[Options-trader 10]

Today the share price fell to $87.05. When the price share was $88-88.2 premiums of the combination were: NOVEMBER'12 92.5 CALL - $1.80 and NOVEMBER'12 92.5 PUT - $6.60. Disbalance of Calls and Puts was critical, so i have bought 42 contracts of NOVEMBER'12 87.5 CALL ($3.90). Total expenses to the combination increased to $48,930.

[Options-trader 10]

At opening the combination had critical disbalance put and calls. So i have opened short position - 42 contracts of NOVEMBER'12 82.5 PUT ($2.95). Total expenses to the combination were decreased to $36,540.

[Options-trader 10]

The price of the share is near $83. Now the premiums of positions of the combination are: NOVEMBER'12 92.5 CALL - $0.10, NOVEMBER'12 92.5 PUT - $9.70, NOVEMBER'12 87.5 CALL - $0.56, short NOVEMBER'12 82.5 PUT - $1.95. The combination has huge disbalance, it means that in the case of growth share, the loss of the combination will increase. So i have bought 10 contracts of short NOVEMBER'12 82.5 PUT at $1.95 and buy 27 contracts of NOVEMBER'12 82.5 CALL at $2.43. The expenses was increased by $8,025. Total expenses are $44.565.

[Options-trader 10]

Yesterday i have closed the combination: bought short 32 contracts of NOVEMBER'12 82.5 PUT - $0.25, sold 42 contracts of NOVEMBER'12 92.5 PUT - $7.40, sold 27 contracts of NOVEMBER'12 82.5 CALL - $2.91. NOVEMBER'12 87.5 CALL i leave it for a while.

[Options-trader 10]

Yesterday NOVEMBER'12 87.5 CALL was depreciated. The combination loss is $6.914 or 15.36%.