Hi readers! This is just an update on the QQQ straddle from the last post.
In the last post, I mentioned that I was going to short some calls to offset some losses on the spread at that time. Fortunately, the price of QQQ actually moved from last post. Last post, it was at around 382, and right now it is at around 372, which shows a huge jump to the downside. This is why I haven't made any adjustments to the spread, as the stock is showing some movement. I am not planning on making any adjustments right now, as if the stock continues to go down, then the straddle will eventually make money. To the downside, the breakeven point is 367.7, so QQQ has to go down just another 5$ for the straddle to break even.
However, if QQQ starts to go up again, or stops moving for a while, I will have to make some adjustments to the position. I know I said that I will short some calls, but I am actually planning to short some puts instead to add positive theta to my position. It will also bring my deltas near zero, to maintain a delta neutral position.
Right now, the straddle has overall -490 delta, and since it is negative, my position will profit if the stock goes down. To hedge myself against any big moves and to bring my deltas back to 0, I might short 9 of the 11Aug23 373 puts. This is good because this will bring my delta to 5 delta overall, which is really close to delta neutral.
For now, I will wait and see whether QQQ continues to move down or moves up, and based on that, I will have to make some adjustments. That is all for now, and thank you for reading!
