Stock / Symbol: [private_monthly]Wells Fargo / WFC [/private_monthly]
Option Strategy: [private_monthly]butterfly put spread[/private_monthly]
Trade entry date: Mar 5
Price at trade entry: $30.92
Price at this post: $31.24
Current Position: [private_monthly]
Long 7 WFC Mar12 31 puts
Short -14 WFC Mar12 30 puts
Long 7 WFC Mar12 29 puts
for a net debit of $0.24 per contract
[/private_monthly]
Update: [private_monthly]With WFC currently higher than our breakeven at $30.75, we discussed adding a 32/31/30 butterfly to our 31/30/29 butterfly. While doing so increases our upside breakeven to $31.35, it also more than doubles our risk on the trade. Therefore, because we're risking relatively little on the trade, we're going to hang on and see if we can get WFC to pullback a bit more. However, if WFC is trading here by Friday afternoon, we'll have realized the full loss on the trade. So, if you'd rather not risk it, you may just want to close the trade here for a small loss.[/private_monthly]
Max Risk: $168
Max Reward: $500 or 197% by Mar 16
Profit Range: $29.27 to $30.75
Max Profit at: $30
Suggested upside stop: $32
Suggested downside stop: $29
[/private_monthly]
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