Trades and rolls

Rolled WDC 86.5 puts this week to next week 85 for 0.65 credit.
Rolled WDC this week 85 CCs to next week for 1.89
Rolled WDC this week 84 ccs to 85 for 1.31 and 1.32 credits
STO SVXY Jan 2019 50 put at 1.92

Nothing else expiring until next week. Finally at least not an up day but we still have 3 hours to the close so I am sure we will have another record after the pull back this morning.

Thurs. trade day

STO for next week of ladders
GILD 11/10 78 put at 1.04
EOG 11/10 92 put at 1.01

Rolled WDC 86 call tomorrow out 2 weeks for 2.23 credit. There was still .40 left in it but looking at mys schedule in the office not certain I would have time to trade at lunch. Better to do it early than not at all.
STO WDC 10/27 82 put at 1.18

From my WDC rolls now my cost basis is under 80 and finally showing big profits on the rolls. New trading range looks like 82-87 so as long as we stay there I will keep rolling the calls to take in more cash each week. Also pulled in the dividend of 0.50 last week. Virtual ATM last 12 weeks. The CC generates more cash than the puts but lower ROI.

Unless the market moves a lot tomorrow I am good until next week. Hope everyone has a good expiration week and trade smart!

Cheers, Chris

Follow up to the high accuracy discussion below.

So on SPY the risk is fairly high to the reward. As @fuzzballl pointed out would take 33 winning trades or so to make up for 1 loss. However @jeffcp66 has figured out how to adjust credit spreads and losses could probably be contained to a reasonable level or a break even.

Regardless, I think the most efficient way to play this would be with /ES options (so excludes IRA accounts, need margin).

Full disclosure, I used to do this and was hugely successful, paid cash for 2 VWs in 6 months but then lost my shirt and a bunch more on 8/24/2015. My wife swore me to secrecy that I would never tell anyone exactly how much but will leave it as I gave back 6 months of profits in 1 day. Enough for another 2 fully decked out VWs.

So I figured out my issue since then and it had to do with leverage and a broker that did not understand futures options (optionsxpress). TOS and Tradestation allowed me to adjust my positions and broke even 2 weeks later. I have been doing this a little since and as long as you keep the leverage under control can manage the losers. I have not been posting because if you do not understand that part it is very risky. If you guys want me to post these trades I will. I tried it with oil but harder to do since no weekly options.

So here it is with a few tweaks. Combo of tastytrade and fishback techniques with my own addition.

Sell the closest to 45 DTE strangle on /ES. Currently would be the 37DTE 2405 put and 2620 call. These are both delta 9 options with prob. of 90% of being OTM at expiration. Current margin is $3895 per contract. They typically decay to delta 4 options in 3-4 weeks and can take 50-60% profits then as well. Then roll to next cycle closest to 45 DTE and start over, rinse and repeat.

Here is my tweak, I keep 6k on hand for each contract, that way I can cover with short or long /ES contract on a sustained move. If the delta gets to 30 will either roll, or if it appears will keep moving use the /ES contract. At that point you become directional but your risk is covered if you have 1 contract for every option and the only extra margin is to fulfill the futures contract. To the upside a covered call and downside a covered put. If you are exercised the contract fulfills the option, both positions close and you just made a tone of cash. That only happens a few times a year if lucky.

Advantages over SPY: trades almost 24/7. I tried to adjust at midnight on 8/24/17 and then went to sleep but the market moved another 300 points over night, only panic attack since getting caught in an avalanche skiing back country 20+ years ago.
Tax advantage 60/40 treatment like SPX
Much lower margin than on SPX. To do 1 contract on SPX is like 109k margin.
Liquidity although was not so good 8/24/17. The spreads went 25 points wide that day and getting anything filled was hard to impossible.
The put call/skew is still really good since 1987 so you could also do it one way directional on the puts and still have good return. Then would only have to adjust in 1 direction. The 2405 put is 4.85 as I type this and the 2620 call is only 1.85.

Disadvantages: a flash crash may move too quickly to cover, see above and you can lose a lot more than you get out or put in.
The double leverage of the options on the futures cuts both ways.
2 /ES = 1 SPX = 10 SPY so effectively 10-20:1 leverage compared to SPY options which are already 10:1. Like nitrous on a turbo car, fun until you melt the turbine wheel and the resulting shrapnel punctures the engine block! Been there done that and have the t-shirt and don’t want to do either again.

So that’s the best way I can come up to trade the SP500. Thoughts, comments, suggestions always appreciated and if you want me to post these trades I will. Just understand the leverage before doing it.

High accuracy options update. Finally…

High accuracy options update. Finally watched the DVD. Did not learn anything new but Fishback has found that a 1.21815 standard deviation tends to have the best risk/reward ratio. For those that do not want to do the math that works out to 90% probability of being OTM at expiration on TOS.

This is only for indexes, not individual names. But trading SPY the last 12 months using the 90% OTM short strike then going 3-5 points out on the long with iron condors they had a 300% return on investment and only 1 or 2 loosing trades. I don’t think they adjusted them looking at the spreadsheet, if they had probably would have been 100% winners.

Next week some WDC cc expire/assign in a small account. I will set up a new experiment. SPY 21-28 DTE 1.2 STD deviation iron condors. Add a new cycle each week and let the worthless ones expire. Anything goes ITM will adjust and see what happens. The account only has 6k in it so will see if I can get the same results in a rolling year.

#hashtag

#longcalldiagonals SVXY synthetic rolled the…

#longcalldiagonals

SVXY synthetic rolled the 10/27 78 call out to 11/17 for 1.35 credit. Cost basis now 9.62 and 14.70 depending on lot against original basis of 16.06 and 21.14. It went up too fast to roll the short call weekly.

Lesson learned, next spike will set up additional synthetics with disaster put but will not sell short term calls against it. Not trying to be greedy but had I left it synthetic would be up almost 10k on 4 contracts. By selling calls I have limited it to 8k so still a great return no doubt.

I will keep the experiment going until Jan 2019 but I think we can all see it works and there is such a directional bias with UVXY, XIV, VXX, SVXY probably better to set them up on a vol. spike then leave them alone or sell really far OTM like 30 or lower delta.

Shotgun trades, new #optionladder Setting…

Shotgun trades, new #optionladder

Setting up some new ladders in names with good premium. Some have earnings in a few weeks.

STO EOG 11/3 93 put at 1
GILD 11/3 79 put at 1.04
MU 11/3 39 put at 0.93

Will add new trades each week until 3-4 rolling weeks on the ladders.

BTC 11/3 XBI 79 put at 0.23. Sold 0.94. Premiums dried up on this since it went booster phase. Should improve with next big pull back. Only 1 week left on the ladder on this then will be out until the premiums improve again.

#optionladder BTC XBI 21 DTE…

#optionladder

BTC XBI 21 DTE 80 put for 0.22. Sold for 1.01. Holding off on adding to the ladder since this thing went parabolic last 2 months. When it pulls back will re-establish.

Also freeing up cash/margin for when things look better from an option selling stand point.

Last trade of the week for me, hope everyone has a good expiration and weekend!