Currently I have a XOP short strangle on that I am thinking about rolling out to Aug. My current XOP short strangle is up money and I will continue to manage it until I feel my risk is higher then my reward. I have the short 44 put and short 52 call, and with rolling out to Aug I will want to widen out my strikes. I’m really liking the 42 put and the 53 call, so basically I am going out one strike to widen my position.
XOP is showing sideways price action with the nearest resistance at 52 and support at 44.5. My thought is that we stay in-between that area. Implied volatility looks like it wants to head lower and we could possibly see IV back round 30%, which is a drop of around 8-9% in IV. Aug trades are starting to look good, but IVs are a lot lower then in July. I am trying to take advantage of what IV is left in some of these options. If IV gets back to the 6 month low on the SPY I will possibly set a calendar to hedge some of my short vega that I will be setting this week and next week.
Below is the trade idea that I have on the XOP.
With the current XOP trade I have on I had to flatten delta when we tested the support, when I roll this spread I will keep my long put to continue to hedge this position.