It’s been awhile since I posted, thought I’d pop in here and say hi! I’m deep in the weeds at Option Pit. I’m in their pro group now. My trading is changing quite a bit, to a style that is more “book management” than “trade management.” Using low volatility to build a catalog of long puts and calls, then selling around them to pay for the decay, and selling out the longs as the market demands (for example I have a bunch of IWM puts that are getting close to being up 100% now, so I’m metering them out). I’m doing a lot of ratio calendars to acquire the longer dated options at a discount. This would be impossible to do with the old commission structures that had a ticket fee + contract fee. Thank goodness Tasty Trade caused a lot of pricing innovation! It’s less stress knowing a big move in either direction pays out nicely….it’s just managing the middle that’s important. It’s going to be an interesting quarter with everything going on. I’ll try not to be such a stranger!
I caught a rare Liz & Jny this morning “Calling All Millionaires” and caught their #Zebra trade (Zero Extrinsic Back Ratio). This is a little similar to the #Cobras I was doing a little while back (Covered Back Ratio). It looks like a good way to keep some short delta in the portfolio.
My trade today: BTO SPX Sep 26 2940 put (30DTE, 70 Delta) @51.70 x2, STO Aug 29 2900 put @ 6.80 x1. These get rolled every two days (keep track of accrued credits against the longs).
Good video here explains the trade and management:
Here’s my trade for tomorrow am:
1. STO qty 10 sep 34 puts @.44
2. BTO qty 1 sep 41/39 put debit spread @ .85
3. BTO qty 1 38/36 put debit spread @ .51
BE $33.30, profit levels: step 1 $304, Step 2 $504, Step 3 $704. 50% of step is my target.
I’m doing something a little different here.
BTO: 1,000 shares @46.25
STO: Aug 10 46.5 calls @ 3.40 x10
BTO: Aug 24 43 puts @2.67 x12
EM up = approx $1400 profit, EM down = approx $200 loss Max loss= approx $700 No upside risk, Diagonal-type risk graph, $3000 max profit on no movement.
I just wanted to show y’all how well this trade performs for earnings. WTW has been down as much as almost 15% today, yet my trade is profitable. On top of that, since it is in the “second step” I have a max profit of $1013 to shoot for. My target profit is 1/2 of max. If there is a whipsaw recovery on this stock, my max profit doesn’t drop below $505 (no upside risk).
SHAK closed for over target, $315 profit on #stairstep
WTW: Opened Stairstep for earnings today. STO Sep 70 put @.95×10, BTO Sep 90/85 put debit spread @ 2.17 x 2, BTO sep 80/75 put debit spread @1.14 x 2. Break even is $68, 25% down from current spot.
These trades are 100% winners so far
#Stairstep STO Sep 50 puts @ .75 x10, BTO 62.5/60 put debit spread @1.10 x 1, BTO 57.5/55 put debit spread @.69 x2.
Break even 48.75, which is getting close to 34% downside with no upside risk.
Important note on these trades: The breakeven is very far away, but on a significant down move there are short term losses that require duration in the trade for theta to overcome. As price drops, the “stairstep” profit levels go up.