Fun facts for today:

1. The Dow took 103 years to reach 10,000. It has just dropped 10,000 in less than 30 days.
2. The VIX has put in a higher intraday high 5 days in a row, despite two of those days being strong UP days for the market.

SPCE SPY

#ShortPuts #CoveredCalls – Out all day but had a couple standing orders fill…

Bought to Close SPCE MAR 20 2020 14.0 Calls @ .05 (sold for 1.95)

And for better or worse starting a covered call selling program on the SPY if I get stock (looks like it)

Sold SPY MAR 20 2020 225.0 Put @ 4.00
Sold SPY MAR 20 2020 220.0 Put @ 4.00

#PreferredShares A lot of preferred…

#PreferredShares
A lot of preferred shares are down with the market and pushing yield higher.
Some of the perpetual shares from big names are up to 8% yield.
Do you have any opinion on getting preferred shares at a discount?

Market Shutdown Guide for Options

Market Shutdown Guide for Options

Lots of conjecture around the market shutting down, what happens to open option positions. Tos directed me to this guide (remove the quote marks and copy/paste the link):

“https://www.theocc.com/components/docs/about/publications/unscheduled-market-closings-guide.pdf”

It used to be that the option owner would have to provide execution instructions, but now OCC executes every option that is ITM at expiration. I’ve had an issue with collars, where at the last minute the protective put drops ITM, gets assigned—taking my long stock away, and I’m left with naked short calls. So on my collar positions I’ve been trying to spread the short calls with something, anything, cheap to protect against that scenario on a surprise shutdown with ITM puts ready to expire.

It’s also important to be aware of how spreads will be affected on market shutdown if the stock price is between the spread strikes at shutdown (with looming expiration), it could cause execution/assignment of one leg leaving a potential dangerous situation.

So the way I read this is that on a shutdown, the options that expire during the shutdown will be assigned based on the last regular traded price of the stock before shut down. So….let’s say you have a AMZN Call Credit Spread, short 1800 long 1810, and the last traded price of the stock is 1805…..you WILL end up short 100 shares of AMZN at 1800, the 1810 will expire. This is quite dangerous with no ability to manage.

SPXpire

#SPX1dte Expiring: $SPX March 18th 2220/2240-2740/2760 condors, sold yesterday for 1.95.

SPY

Bought a bit more SPDR S&P 500 ETF @ 230.00 to add to my small position.
225 is the next target.

HAL Buy Write

Bought 100 HAL / Sold 1 HAL 03/20/2020 6.00 Covered Call @ 5.0 debit
#AccidentalHighYield

FITB Buy Write

Bought 100 FITB / Sold 1 FITB 03/20/2020 13.00 Covered Call @ 12.0 debit
#AccidentalHighYield

Circuit breaker HIT again!

Crazy times. I don’t really see why this should end, however. The entire world is coming to a halt. Some businesses are closing entirely, unable to weather even a month being closed. Layoffs are piling up. Our country will rack up another $2T in debt probably before the end of this month. This is an unprecedented event… I feel the indexes could easily be cut in half, meaning 1500 by the time we get to May or June. But this is only my personal speculation… I just base it on what I think SHOULD happen when most of the world is shut down.

The VIX is up today but not as dramatically as VXX and UVXY. Futures backwardation is quite dramatic.

UVXY closed

This market is relentless. Welcome to the first Bear Market since 2009!

BTC $UVXY March 27th 50/60-130/140 condors for 3.825. Sold yesterday for 3.65.

I’m not sure how I got this to be only a small loss when UVXY has risen over 30% since when I sold it yesterday. But we could hit 130 today so I no longer like this trade. Lucky that I was able to exit so easily but the difference between the two call strikes was only 3.13, while the put side deflated from yesterday dramatically.