Tuesday, September 8, 2009

09/08 MNX Iron Butterfly

There was a small drop in P&L Today as the market moved up and I started moving spreads around to protect the current profits. My goal is to stay in the trade as long as conditions are good.

I've started to manage inventory, by that I mean avoid having short contracts In The Money, to fix that I use Debit Spreads to perform what Dan Harvey Calls a Vertical Roll: Moving the short further out of the money. This gives a degree of protection to the trade by reducing the gamma and still provides for Theta to continue comming in.

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