This is panicked buying and/or short selling.  First of the month could also play a role.

This is a difficult move for the SPX strategy.  I am remaining patient and will wait for the pullback.  If one does not come, I will work any ITM positions to move them to higher strikes with market swings.

The key is being comfortable holding these positions for many days or weeks. If it does not affect your ability to enter other trades, then patience should prevail.  If it does limit you, then you should probably avoid ITM rolls completely.  If you sold the one this morning, I would still wait for a swing low this week to exit near break-even.

Feel free to comment here or email me if you have questions.

-JP

#SPXcampaign Bought to close $SPX Nov 19th 1860/1835 put spreads for .20.  Sold for 1.25 on Oct 19th.

This was a fill on the GTC order I placed immediately after selling the spread on the 19th.

#SPXcampaign  STO $SPX Nov 6th 2075/2100 call spreads for 14.55.  Rolling from the 2070/2095 spread closed Friday for 14.20

#SPXcampaign Sold to Open SPX Dec 4th 2170/2190 call spreads for 1.25.

This is the first of two call spreads and two put spreads I will try to sell this week for the Dec 4th expiry..

This week, I am looking 5 weeks out as usual and selling spreads for the Dec 4th expiration.  As Monday mornings are usually great for premium selling, I am starting with the Dec 4th 2170/2195 call spread for 1.25.  Order is in, I will wait for a fill.

When we get any kind of down move, I will try to sell Dec 4th put spreads.

Friday, I had to close the Oct 30th 2070/2095 spread for 14.20.  I did not get to sell another ITM spread to replace it, so will look to on up moves today.

Allowing a spread to get ITM is not ideal, but I have on occasion allowed it to happen with call spreads. When SPX feels toppy, as I feel it is now, it is pretty certain that we will be below current levels at some point in the near future.  Therefore, you can roll an ITM spread each week until you get the pullback.  I did not try this on the move up from 1900 to here…  VIX was plummeting and we were screaming higher.  But once here, near 2100 and not far from all-time highs…  the VIX has stopped dropping dramatically, so I feel comfortable with it.

Again, not ideal, and many will not be comfortable with 10-20 dollar spread in their account. But if you employ patience, it can become easy.

But best bet is just to use more disciplined stocks and get out long before ITM happens, then roll at more comfortable prices.