SLB Strangle Adjustment

SLB Strangle - 🔥 HotTrade - Adjusted for an additional $49 credit

SLB Strangle Adjustment

A strangle is a neutral strategy. It is the combination of an out of the money short put and and an out of the money short call. Your goal is to profit from time decay (theta) if the stock stays between the lines. If we underestimate how high we think the stock will go and it breaches the upper call, we will need to purchase the stock at whatever it's trading for at expiration.

If we underestimate how low the stock goes, and it breaches the put, we will also need to purchase the stock at the put's strike price, even if the stock is worthless. (These are both worst case scenarios and we can certainly exit to the trade for a loss prior to expiration). This is why we deem strangles as "high risk", and usually don't enter any in stocks higher than $50/share.

For SLB, we entered a trade on 5/25 with a 37.50 put and a 52.50 call to July 15th, collecting $162 in premium. (This was mentioned in our Weekly Newsletter)
Today, 6/7, I adjusted the put and rolled it up from 37.50 to 42.50, collecting another $49 in premium. I did this because of the rally in SLB and to keep my delta around 16.

To adjust this strangle:

• Buy to close +1 SLB 07/15 Put 37.50 @ 0.24

• Sell to open  -1 SLB 07/15 Put 42.50 @ 0.73

In total, I've collected $211, and am just waiting for this baby to hit 50% of my initial entry, or 81$ in profit.