fuzzballl 9:47 am on Wednesday, August 27, 2025

SPX

Finally a little dip to sell into.

Bought to Close SPX Aug 27 2025 6435.0 Put @ .60 (sold for 11.30)
Bought to Close SPX Aug 27 2025 6440.0 Puts @ .40 (sold for 11.55)
Bought to Close SPX Aug 27 2025 6445.0 Put @ .40 (sold for 22.10)

Sold SPX Aug 28 2025 6440.0 Puts @ 11.60
Sold SPX Aug 28 2025 6450.0 Put @ 14.60

jsd501 11:26 am on Wednesday, August 27, 2025

I was trying to think this trade through and I think what you have is a straddle with the 6400 put and call. Then you turn the call into a condor or a bull call spread on the call side with the 6400 call and 68oo call. I am not sure what to call the put side but it is a spread with different expirations. Now I understand the trade and it works because of the expiration date being so long to maturity. It also helps that there is a lot of liquidity on the SPX long dated options.
- fuzzballl 11:42 am on Wednesday, August 27, 2025
  
  Looking at the LEAPS position:
  
  The short 6400 call and long 6400 put would be synthetic short stock. The 6800 long call is just to protect the upside. Or…selling a 6400/6800 call spread to help finance the purchase of the put.
  
  Then the daily put sales against that would be sort of a diagonal put credit spread.
  
  No matter how you look at it you are correct. The daily put sales bring in waaaaay more than the max possible loss on the LEAPS position.
  
  And with making occassional adjustments in the LEAPS (rolling up) in an up market I’m having trouble finding any major downside to the strategy. And leaving some of the LEAPS uncovered for additional downside help really helps in an implosion.
  
  The only downside I’ve really noticed is when the VIX is in steep backwardation it’s difficult to roll the puts you sold down and out. Might have to pay a debit at times. But that’s only for short periods of time….
  
  The VIX futures curve is in backwardation relatively infrequently, occurring on approximately 15% to 20% of trading days, with the remaining 80% to 85% of the time the curve is in a normal upward-sloping state known as contango.
- fuzzballl 11:51 am on Wednesday, August 27, 2025
  
  I went ahead and added a couple more to get me to max size (for now). I’m currently holding 12 LEAPS positions and selling against 8 or 9. I did up it to 10 for NVDA earnings though since premiums were pretty juicy and I don’t see NVDA tanking the whole market (yet).
  
  If you do the math on 5 bucks per day per position it gets incredible especially when you consider that 40 thousand is the max loss on any position once you recover your initial cash outlay. That can all be covered in well inside a year then everything else is straight to the bottom line.
  
  The rental house analogy is still a good one in my opinion.
  - jsd501 12:00 pm on Wednesday, August 27, 2025
    
    I just added 9 contracts for a total of 10 which is enough exposure and can make a lot of money in the next 3 years if we are right.
    - fuzzballl 12:04 pm on Wednesday, August 27, 2025
      
      I’ve been doing these for over 2 years now. One year paper and one year real. So far so good. Definitely leave a few uncovered though. Helps me sleep better. LOL
    - fuzzballl 12:06 pm on Wednesday, August 27, 2025
      
      And…I’ll probably look at rolling all the 2029s out in another couple years….maybe when they have two years left then do the roll. There will still be decent residual value in them and never even get close to max loss that way.
- fuzzballl 11:52 am on Wednesday, August 27, 2025
  
  The LEAPS adjustment: (older video but still applies)
  - MikeL 1:19 pm on Wednesday, August 27, 2025
    
    It is so interesting that I have not been able to keep up with the value loss in the long LEAP put. Clearly you are much more aggressive with the strike selection for your short put, while I am more conservative. In my case, I am trading just to keep the net loss to a minimum, and waiting for SPX to come down a bit.
    - fuzzballl 2:27 pm on Wednesday, August 27, 2025
      
      Nothing goes up forever (usually!) The way I see it is let’s say max loss is cash outlay plus width of the call spread. That’s usually a total of about 78 grand give or take if you are setting the position about 4 and a half years out. That leaves 234 weeks of selling. To get 78 grand you’d need around 335 a week or about 67 dollars per day (.67).
      
      If you’re really selling super conservatively and the market is going straight up you could fall a little behind. Shouldn’t take long to get ahead on a decent pullback. Long term the numbers should play out. Hard to tell right now with the market closed but I’d think selling 2 times the expected move each day would get at least 67 dollars. I’ll try to look at that tomorrow after the NVDA and pre market data volatility comes out of the prices in the morning.
    - fuzzballl 2:31 pm on Wednesday, August 27, 2025
      
      By the way, the way I track these comes down to these numbers:
      
      Debit to open the LEAPS position
      Credit to close the LEAPS position
      Total premium received on daily put sales
      
      With those numbers you can calculate exactly where you stand. I’ve found I can’t use after market numbers because the spreads get stupid and I can’t even really use Fidelity numbers when the market is open they are so far off. Think or Swim is where I’ve found the most accurate data for LEAPS and it still has to be when the market is open. When I’m in a mood for math I’ll screenshot the numbers a few minutes before the close and use those.
      
      Did you sell the call spread to help pay for the long put or did you just buy the put?
      - MikeL 3:15 pm on Wednesday, August 27, 2025
        
        I am using a similar calculation based on the price to close each position. Also, I did 2 rolls up to bring the LEAP put closer to the market price. The put is now at 6300.
        
        I decided to go with a LEAP put only to reduce the risk of the call spread, as the market keeps going up. At this point I an considering adding both a put and call spread, as it feels like the market a bit overbought.

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