Alert: Adjustment – CAT Time Twister 3/14/23

Ticker: CAT
Price: $226.05
Date: 3/14/23 1:15 pm
Underlying: Caterpillar

Master Portfolio Contracts: 10

Notes: Our CAT time twister has moved far ITM to the Put side.
Rather than take a loss, it makes sense to manage this position for a while and bring it back to break even or eventual profit. Doing this means we will be in the trade longer but will avoid booking a loss.

This is going to be a several step adjustment so take your time and make sure you move the correct legs. When we are done we will have a core trade made up of puts only and 2 legs. 

Trade Detail:

CAT Trade 1: Close the 24 Mar/31 Mar 250 call calendar for a credit of around 0.23 (5contracts)

BTC the 24 Mar 250 call
STC the 31 Mar 250 call

We lost money on this leg

CAT trade 2: Buy/BTC the 24 Mar 240/245 call credit spread for a debit of around 0.45 (10 contracts)

BTC the 24 Mar 240 call
STC the 24 Mar245 call

We made about 0.95-1.10 profit on this leg depending on your fill prices (won’t know totals until everything settled and have time to

CAT trade 3 is a three step trade: due to margin issues recommend placing the trade in this specific order.

Trade 3: Buy/BTO 10 of the 16 Jun 230 puts for around a 15.25 debit (10 contracts)

BTO the 16 Jun 230 puts

CAT trade 4: Roll the 24 Mar 240 put to the 28 Apr 235 puts for a credit of around 0.30-.40

BTC the 24 Mar 240 puts
STO the 28 Apr 235 puts

We have paper losses on this leg but are bringing in an additional 0.30 credit and are lowering our cost and break even points.

CAT trade 5: Sell/STC the 24 Mar 230 put for a credit of around 6.70-6.80 (10 contracts)

STC the 24 Mar 230 puts
We made about $5800 on this leg

Trade Position After Adjustments:

+10 CAT 16-JUN 230 put
-10 CAT 28-PAR 235 put