I took profit on my CODX diagonal (may/aug) and reset the trade this morning into something you might find interesting. I bought a 1/2 size stock position and sold the June 18 straddle for $8.15. This creates a full size covered call profit structure with just 1/2 the stock size. As you probably know, selling a put equates to a covered call. So I have a full size covered call ceiling with only 1/2 the stock. Takes up less buying power. Got much more selling the put than the call, despite it being ATM at the time. Because of that, the smarter trade would have been just selling puts for a full size position (in hindsight).
I hear earnings are tomorrow….
Thanks for the idea guys, I’ve placed the following diagonal:
Bought Aug 9 calls for 6.76
Sold May 15 calls for 1.40
Market Shutdown Guide for Options
Lots of conjecture around the market shutting down, what happens to open option positions. Tos directed me to this guide (remove the quote marks and copy/paste the link):
It used to be that the option owner would have to provide execution instructions, but now OCC executes every option that is ITM at expiration. I’ve had an issue with collars, where at the last minute the protective put drops ITM, gets assigned—taking my long stock away, and I’m left with naked short calls. So on my collar positions I’ve been trying to spread the short calls with something, anything, cheap to protect against that scenario on a surprise shutdown with ITM puts ready to expire.
It’s also important to be aware of how spreads will be affected on market shutdown if the stock price is between the spread strikes at shutdown (with looming expiration), it could cause execution/assignment of one leg leaving a potential dangerous situation.
So the way I read this is that on a shutdown, the options that expire during the shutdown will be assigned based on the last regular traded price of the stock before shut down. So….let’s say you have a AMZN Call Credit Spread, short 1800 long 1810, and the last traded price of the stock is 1805…..you WILL end up short 100 shares of AMZN at 1800, the 1810 will expire. This is quite dangerous with no ability to manage.
Couldn’t resist selling MSFT Apr 3 105 puts for 1.35….will be much higher in the morning it looks like.
Bot Dec 17.5 Fuzzy last week for tariff hedge, .18 net debit
Sold at the open for .20 net credit
Basically a scratch
Charlie McElligot at Nomura is issuing a lot of gamma red flag warnings for a vol shock. What the heck…a nice time to dust off a fuzzy in VXX.
Dec 20 Bot 17.5 call
Dec 20 Sold 17.5 put
Dec 20 Bot 15.5 put
Net price: .18 debit
I would guess vol stays steady here due to upcoming tariff increases on Dec 15, so I think not much decay on this–it’s a cheap way to get on some long gamma.
Did anyone catch Benioff’s interview two nights ago w/ Cramer? I found it troubling. I’ve always been a Benioff fan, but I’m seeing that he’s maybe losing focus. He spotlighted a stupid “Einstein Doll” that is supposed to talk and answer questions “you can buy it on Amazon”….huh? The doll didn’t work, it was an awkward moment. He seems to be losing touch w/ any kind of shareholder focus. I put a short on yesterday by selling shares and buying a protective call. I sold shares at 163.25, the call was an expensive January 165, so I need a sharp move down to make money, but it was in the 140’s not too long ago. Earnings coming up. Curious if anyone else saw it, if it hit you differently.