#SyntheticStock – Core position is all the way out to 2020 requiring .10 per week to cover max loss. Weak market so I will continue aggressive selling. Pretty good weekly income while it grinds around. Gonna throw this out as an example of how I’m trying to keep the big picture on how these will hopefully turn out some day.
10 lot Jan 2020 48/48/46 synthetic with max loss now reduced to about 8900. That’s actually a little high too since I rolled a small loss on a strangle into the synthetic cost.
30 cents per week in sales for the next 94 weeks brings in 28200. Assuming max loss then total gains are 19300. Over two years against 3800 in margin is about 150 percent annualized on margin. These are rough numbers but still something to keep in mind looking on down the road. Do that in 10 different underlyings and you’ve got a pretty good annual income that’s (hopefully) low risk. Running the numbers for 40 cents per week and 50 cents per week really starts getting interesting especially when factoring in the possibility of not taking max loss!
It’s tough watching the drawdowns when the core is getting hit but looking out further helps a lot. If the stock tanks right after you set the trade the drawdown will be pretty tough to watch but realizing it is capped with plenty of time to continue selling helps a lot. Adding up the max loss on all the positions is a nice way to figure out what your absolute bottom could look like overall also. Knowing this will help control position size. Each weekly sale over and over again reduces that ultimate max drawdown number.
Bought to Close EWW MAR 29 2018 51.5 Calls @ .03 (sold for .40)
Sold EWW APR 6 2018 51.0 Calls @ .50
Options Bistro 