[Option_BWBs_and_Collars] Adjusting unbalanced butterflies

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Noman Ahmed

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Oct 7, 2010, 1:24:18 PM10/7/10
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Hi


I sold 1/3/2 butterfly on SPX at 1120/1140/1160 for Oct for 2.50
Since SPX is very close to 1160 region, this whole butterfly is in danger of loosing the full amount.

But I feel the markets are overbought and there could be some correction.

Is there any way to adjust. Adjusting butterflies are so difficult because there is too little premium received and high risk.

Closing the butterfly costs 8.00.

One option I was considering was rolling over the 1140/1160 from Oct to Nov 1150/1170 for 1.35 debit and leaving the butterfly 1120/1140/1160. This way if the market does go down there is a chance of a profit.

Please advise.

Noman

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Al

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Oct 8, 2010, 4:12:23 PM10/8/10
to Option_BWBs...@yahoogroups.com
 

Hi,
 
For the last several weeks, I've been having difficulty getting filed on unbalanced butterflies on indexes, such as the NDX.   Even after giving up  0.20 - 0.30 from midpoint, the orders are not filled. 
 
Is anyone else experiencing this problem lately?  Any suggestions on how to improve trade execution of such three-legged trades?
 
Thanks!
 
 
 
 

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