fuzzballl 8:28 am on Friday, January 3, 2025

SPX

Using the bounce today to get a decent roll down and out a couple more weeks.

EDIT: Forgot to add the strikes I rolled to. LOL

Rolled SPX Jan 17 2025 6030.0 Puts to Jan 31 2025 6010.0 Puts @ 1.50 credit (38.50 total now)
Rolled SPX Jan 17 2025 6030.0 Put to Jan 31 2025 6010.0 Put @ 1.40 credit (35.40 total now)

jsd501 8:47 am on Friday, January 3, 2025

The IRS is going to like you.
- fuzzballl 8:56 am on Friday, January 3, 2025
  
  LOL true. My biggest position is in an IRA though so they can wait another 12 years to get their grubby little paws on it. May start a gradual roll to ROTH at some point.
fuzzballl 8:51 am on Friday, January 3, 2025

Video 3 starting at about 1:32 explains exactly where I am in this now. Not a bad thing at all. (different numbers in the video but same principle)
Hawk 1:50 pm on Friday, January 3, 2025

I don’t quite get this structure. If the assumption is that the SPX going to go up in the long run, why selling a LEAP BeCS?

I am curious how does your structure compare to double diagonals? ie buying further OTM LEAP call and put, and selling short dated put and calls ATM or slightly OTM? seems, on the paper, the latter is better use of BP and simpler to manage the delta, neutral or with a bias.

I don’t have a lot data with this double diag, though.
- fuzzballl 5:36 pm on Friday, January 3, 2025
  
  I sell the BeCS to help finance the purchase of the put otherwise out of pocket would be crazy high. I look at it more like synthetic short stock (sell call and buy put same strikes) then buy a call to protect the upside. Definitely have to assume SPX will go up over time. These last 2 years have been very unusual by how fast it’s gone up though. Even with a synthetic LEAP short in a rising market the daily put sales way more than offset the losses on the LEAPS. (I’ve averaged 50 cents on the dollar of profit on the daily sales over the last 18 months) A market rising not as fast as it has been or staying flat then the daily sales make bank.
  
  I went with synthetic shorts because of the market being so high it can’t keep up this pace forever. If we even get a 10 percent up market my daily sales profits should be closer to 75 cents on the dollar. Synthetic LEAP longs are very pricey even using a BuPS to finace the call purchase due to the upside skew.
  
  I’m certainly open to ideas though. Can you give some strikes as examples that your mentioning for the double diags? I’ve never done it that way so like to learn. Cash out of pocket to set the position is a higher priority for me than the buying power hit since my cash backing these positions stays in the money market sweep drawing full interest.
  
  My next goal is to get all the cash recovered back into my account that it took to set the positions. Then add another one. Then leave one position uncovered to really help a lot during an implosion and just sell against the rest.
  
  EDIT: BTW I mirror all these positions in TOS since I trade at Fidelity. In TOS it’s very easy to see where the net deltas are at any given time on the overall setup.
  - Hawk 9:54 am on Saturday, January 4, 2025
    
    Thanks for the detailed explanation.
    
    For diagonal, often people buy a longer dated and sell a short dated more out of the money than the long as directional trade, such as PMCC (poor man’s covered call). For income trade one could consider having the long dated leg more OTM than the short dated, ex. SPX short a 6050 call exp Jan 10th, and long 6100 call exp further out (as soon as Jan 13th as further out as a LEAP). I generally do this on the “strong side” where the stock is moving towards (short call if the stock is moving up, or put if stock just had big down day) and you can get more premium, do need to be careful with the short strike. The best outcome is the stock gets close but not passes 6050 by Friday, where can close for some credit from the long leg.
    
    If one expects the stock stay in range, could do both sides as double diagonal, without adding margin requirement. ex. doing 6050/6100 on the call side and 5850/5800 on the put side.
    This structure for Jan 10/13 would bring in $6 credit on a $5,000 BP, that’s 12% upfront credit.
    
    BTW, those strike selections are just for illustrations, not as trade idea, it will require more work to pick the right short strikes ;-).
    
    I tend to do this using Friday/Monday expirations, vs LEAPS, which I would use only if i have strong like and wanted to hold long term. Just a reminder a calendar/diag LEAPS structure, it’s really many trades adding together with expirations in the middle canceled out. Other than saving on the commission one is taking on much bigger risk.
    
    Added: This is what I mean about a long LEAPS calendar: buying a Jan 2025 / Jan 2026 call calendar is the same as buying 2025 Jan/Feb + Feb/Mar + Mar/Apr +…. 2025 Dec/Jan 2026 up front. Nothing wrong with it, it’s just a much bigger trade, or many trades combined.
    - fuzzballl 10:46 am on Saturday, January 4, 2025
      
      Thanks! I’ll chew on that during the snowstorm this weekend. Tastytrade has a saying “duration over direction”. That’s kinda how I play mine. The LEAPS sit out there on the horizon as my apartment building. The building can fluctuate up and down in value but the real money is made in the short term rent income.

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