ex-dividend date is 9/21/2012
You have a 131-136-141 butterfly in a 1-2-1 contract distribution.
You need to buy back the 136-141 credit spread (1 contract each), and sell the 131-136 debit spread (1 contract each.
It is two trades. So...
Trade 1 -
buy to close SPY Oct12 136 Call 1 contract
sell to close SPY Oct 141 Call 1 contract
(ie...buying back the credit spread)
This will be a net debit transaction.
Trade 2 -
sell to close SPY Oct12 131 Call 1 contract
buy to close SPY Oct12 136 Call 1 contract
(ie...sell the debit spread)
This will be a net credit transaction.
All the Calls got so far ITM, that there was no liquidity and the MM's were not moving the butterfly order.
Because we had to turn it into two exit orders, commissions increases a little. It hurts you more than me due to your position size. Sorry.
Realize that this was a spec trade. I "gambled" that SPY would go down upon entry. It went against us pretty quick, and the QE3 didn't help. Managing like I did could have rescued it or at least cut down on the loss. I forgot about dividends on SPY. That was a mistake.
The value of this strategy is understanding that as long as you can keep losses to ~50% of capital during poorly anticipated directional moves, the months that you get the direction correct, you can bank an easy 50-100% profit, sometimes more. So, if you are correct 1/2 the time, the profits typically outweigh the losses and this is a longterm winning strategy. Also realize that in regards to Money Management, you don't want to put more than 5-10% of total capital in your cumulative spec trades per month. You want to balance them out with about 40-50% in non-directional plays and ~40% in long-term plays.
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