Last week was dominated with Greek news and political stories. What if? What if not? In fact, the weekend brought kind of clarity, but still, there is not release of rumors and speculation.
Checking the last weeks performance of the butterfly strategy shows little impact. After the last options adjustment to extend the range on the down side, we are still pretty comfortable in the range of profits.
In sum, the EuroStoxx 50 closed around 3,440 last Friday. The value of the options sold is 5,390 EUR decreased by the cost of insurance of 100 EUR that rised in value to 156 EUR. Total depot book value is 5,546 EUR.
Based on the options premium earned to date , we are sitting on a loss in the books of 5,199 EUR - 5,546 EUR = - 347 EUR. As the options expire in September 2015, the loss is not relevant yet. If the EuroStoxx 50 Index would close at the current level of 3,440 Points we would realize a potential profit of 3,199 EUR.
But of course that is only hypothetical, as everybody knows that the index will not be flat for two and a half months. The strategy is to adjust our range as good as possible to keep the index in the middle of our profit zone.
By the time I am writing those lines, the market already opened with another drop of -2 % bringing us close to the next adjustment level of 3,350 points. At the moment we can still lean back and watch the markets. Next steps will be taken if the market declines furthermore.