CF Industries (CF)
This ticker has been annoying and gave us moments where I could have closed for a profit, but never for our profit target, so I waited. It’s expiration week, so we need to do something about it.
I’m inclined to close it for a loss and move on, but we can attempt to recover some losses by rolling it out in time. We have 0.55 in credit from the original trade, but it would cost around 1.47 if we close today, creating a loss of 0.92 per spread, so that’s why we are going to adjust the trade.
I will also add a put spread since I can take in credit without adding additional margin, which is included in the call spread. This will create an Iron Condor with strike prices near the expected move range.
My target on this trade is to reduce the existing unrealized loss in half or maybe break even if CF stays within a range.
Earnings are coming up in mid-August, so I plan to be out of this trade before then – win or lose.
These prices are based on what I see on the trade screen at the moment, but won’t know what it trades for until the email goes out.
TRADE ACTION 1: Roll the put spread out in time and adjust the strikes for a debit of 0.70 – 0.75
BTC 21 JUL 72.50 call
STC 21 JUL 75 call
STO 4 AUG 79 call
BTO 4 AUG 84 call
TRADE ACTION 2: Open a put spread for a credit of around 0.75 – 0.80. This credit spread will help finance the adjustment from Trade Action 1.
STO 4 AUG 70 put
BTO 4 AUG 65 put
New Position Credit: 0.55 – 0.70 + 0.75 = $0.50 – $0.50 depending on fill prices.