We have entered into a longer dated put butterfly in Gamestop (GME). The company announced a new process of buying Bitcoin with their available cash. They are at the point in time where they are grasping at anything to try to save their business and drive the next spike higher in the shares. The new trade idea is detailed below:
Buy to open: GME Oct 17th (monthly) 20.00 strike put (ratio of 1)
Sell to open: GME Oct 17th (monthly) 15.00 strike put (ratio of 2)
Buy to open: GME Oct 17th (monthly) 10.00 strike put (ratio of 1)
Debit: 0.88 – this order has been filled
Max risk = 0.88 or $88.00 per spread traded
Max reward = 4.12 or $412.00 per spread traded
The options have a little bit wider bid/ask spreads due to wild volatility in this stock. As such it is important that we do the entire spread together and not try to “leg in” to the butterfly. It also makes it more likely that will hold onto this trade much closer to the expiration. A little different than something like our GOOG trade where it has a bit more liquidity and we could take profits at any time.