This trade has been going against me for some time and I did not adjust it earlier. So this is mess up #1 on this trade (not taking action sooner).
Mess up #2 is here with me accidentally buying calls instead of selling them to neutralize my trade. I thank the market for blessing me with a small profit with my screw up though. Next time, I may not be so lucky if I mess up so I am not going to bank on it happening again. Below I immediately sold the calls I bought to get back to just the naked puts. Rule #1 in trading-if you make a mistake, don't try to salvage it...GET OUT as soon as possible.
BOT +16 GS 100 JUN 08 175 CALL @3.25 debit
SOLD -16 GS 100 JUN 08 175 CALL @3.37 credit
Now I sold the correct calls as follows:
SOLD -16 GS 100 JUN 08 175 CALL @ $3.55 credit
Here's what it did to the greeks on my trade. Below is a screen shot of the analysis of just the naked puts I was in. Notice how the trade is currently in the non-profitable zone at 168.40 (just left of my breakeven).
Now, by adding the 16 short calls, my delta is almost completely neutral and I have increased my theta and vega to beef up my short side. Also, I am now between my breakevens at 168.22 and profitable instead of at a loss. Once the stock starts heading upward again above 175, I can either remove the short calls or exit the trade.
I will be looking to close this trade within the next week as we are approaching June's expiration.
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