Feb 21 #Fuzzy Land
Hi there everyone! It’s been a couple days since I’ve posted, but I didn’t want to bore you with the same trades. As it turns out, I’m really liking the #AtomicFuzzy! The built in hedge is working really great this week. I was having problems sleeping over the weekend, when I can’t sleep I plan out trades in my head. The first trade I mapped out was a series of laddered SPY fuzzies in Apr/May/Jun, unhedged, totaling 250 contracts (across multiple accounts) when fully built. This would equal 25,000 shares of SPY, total risk approx $175,000, with about $87,500 profit on every $5.00 up move in SPY (assuming .7 delta). That was a fun dream. The next night I designed the same trade but as an Atomic Fuzzy. 250 contracts, risk is now aprox $87,500, and a $5 move in spy = $43,750 (assuming .35 delta).
I’ve got Atomics now on SPY, QQQ, TBT, JPM (based on #UOA today–Mar 120 calls). 45 SPY contracts, 40 in QQQ. I won’t be adding anymore unless I can get some good strike diversification.
Q’s: May 166/166/164 @ 5.86 170/175 Call Credit Spread @ 2.00 double size.
SPY: Apr 272/272/270@ 5.91 278/283 Call Credit Spread @ 1.69 double size.
There’s a chance we’re entering a range bound market here for awhile, meaning I will need to be opportunistic on taking profits, vs if we are in a trending market (that’s another reason why I went heavy on Atomics vs Unhedged). But I am trying to set up longer term trades that require little management. I do realize that SPY and Q are heavily correlated. Until more profits start getting booked, it’s still an experiment! BTW, Atomics won’t work on Fuzzy Bears due to the put skew, you can’t get enough selling put spreads to even come close to covering the cost of the protective calls.
p.s. My 45 SPY contracts have about $18,000 total risk, for virtual control of $1,215,000 of SPY shares. The beauty of fuzzies! I probably won’t post a lot unless some of these start coming off, or need some kind of management.
Feb 21 #Fuzzy Land