Rolled Oct. 16, 45 put to Oct. 23, 16 put for 1.68. Just dropped below 45 this morning.
Rolled Oct. 16, 45 put to Oct. 23, 16 put for 1.68. Just dropped below 45 this morning.
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.
STO SPX Mar6 BeCS 2820/2825 @ .30 x4
BTC SPX Mar6 BuPS 2740/2735 @ .05 x4. Sold @ .30. Profit $100
STO SPX Mar6 BeCS 2820/2825 @ .25 x4
STO SPX Mar6 BuPS 2760/2755 @ .25×4
Full position on for this round.
#LongCalls Starting to sell $SPY March 8th 277.5 calls, bought for 1.73 avg price. Sold some for 3.30 today.
For some reason the reply button is not working for me at the moment.
Adding to @jeffcp66 and @kathycon discussion below on SPX/SPY/ES credit spreads below, the idea is to get a directional kick if the short strike is violated. Sometimes it works and you get a good profit spike. From what I did with #spycraft the other day, not looking so good today but I did not have time to adjust. Hoping for a snap back rally tomorrow.
The way I see it there are 3-5 adjustments that may work most of the time, none are going to work all the time.
1. delta neutral buy back half of your short strikes. Works great if it keeps moving, not so much if it reverses like it has for me.
2. delta neutral, buy some options between your strikes. Same as above but probably a little cheaper and the same problems as above.
3. just closing it down at a certain loss level or closing it early. You could also roll out and up/down but may be hard to get credits if it has already moved that much.
4. butterfly, either BW or regular. This is probably the cheapest and can be skewed but then will have loss on one side, but fixed gain or loss on the other. At least you stop the bleeding at that point and lock in your gain/loss.
5. convert the short side to a calendar or diagonal like a #fuzzy and then manage from there but then you may be in a position a lot longer than you want.
Final decision up to you but I am going to keep experimenting with all 5 options to see if there is one that always works the best. Like @kathycon I think the butterfly will be the most efficient. Once on you can leave it alone and let it expire. Everything would cancel out.
Per my SPX IC defense plan, I bought back half of my Jan18 2635 short calls. This will allow one of the long calls to run unhedged in case this rally continues into Friday.
Here’s some follow up info to the post I did a couple days ago:
1. Scott Ruble is currently at www.stratagem.com His courses are good, but expensive. His “POT” (Practical Options Tactics) subscription is VERY expensive ($299/mo) and generally not worth it, very frustrating (You can get a 30 day trial of POT for free though). He has moments of brilliance, but you have to weed through a frustrating delivery style. @kathycon and I call it “finding gems in the poo.” Aeromir offers a 10% discount for Scott’s stuff, I think the coupon code is “AEROMIR10” or maybe “AERO10”. Scott is a bit like “Whiz-Lite.”
2. Scott used to be at Random Walk and the Random Walk website has some of Scott’s classes…some are even FREE…so I recommend going to www.randomwalktrading.com before doing anything at Stratagem. The “Layered Spreads” class at RW for $95 (on sale right now) is a must investment I think. Very very good, and taught by Scott. You get a very detailed pdf book with the course. If you buy the course, you get access to many videos immediately, but the PDF takes a couple days to receive while they do the ID encoding. All the doc downloads at RW are encrypted with your personal ID…so you can get in trouble if caught sharing them. Ed T. at Random Walk has the “OIA” subscription for $50/ mo….excellent value for what you’ll learn and his professional delivery.
3. Aeromir www.aeromir.com (Aeromir took over the defunct “Capital Discussions” group) has a free membership that gets you two week access to tons of videos (rolling two weeks)…definitely do the RTT 1 month trial for $25.00. You’ll learn a ton of good stuff. After the first month it’s $155. I think you can learn enough in the first month to go it alone. The trial will inundate you with info though….tons of email updates, risk graph images, texts on every update, videos to watch. They’ve recently launched two new services based on RTT, that give you “light” versions of info for a cheaper monthly expense. Just do the full trial and you’ll be on your way. RTT’s have struggled a bit with us in backwardation right now, so they have needed a lot of management…which is actually good to see the approaches they take for defense (Risk Reversals, Rolling Thunder hedges, Reverse Harveys). Aeromir does a lot of roundtables bringing in various trade experts to talk about their designs. If you search on YouTube for “Aeromir Scott Ruble Roundtable” he recently did a really good session on Rolling Thunder. I’d classify Aeromir as kind of a “bulletin board” type core, surrounded with different trade services. Low tech website, but they do bring in some good roundtable speakers, and “Trading Group 1” in the videos are usually worth listening to.
I think that’s about it, I’ll add more if I think of it.
Below is a snap of an article in Stocks and Commodities magazine about the RTT. I have the pdf if anyone wants it, drop me a line. firstname.lastname@example.org Or you might be able to google it.
Hi Everyone! I just couldn’t find a new bread-and-butter trade this year that justified reporting, so I lost track of a lot going on here. I did find some good new approaches though. I found Scott Ruble (Stratagem) to be an excellent teacher on structured courses, but a terrible terrible subscription provider. @kathycon and I have used several of his approaches in the last few months to make money…#AdvancedRiskReversals, #SpikedCollars, #LayeredSpreads, and #RollingThunder. Scott was with Random Walk for awhile before having a falling out. Ed has taken Scott’s place at Random Walk and has a $50/mo subscription service that I quite like. Very reasonable for what you get. Ed’s approach is #PregnantButterflies which layer in spreads in a way to provide wide profit ranges, often risk free. The #RTT (Road Trip Trade) trades at Aeromir are good (BWB), and they manage them very dynamically using a lot of Scott’s teachings. The one month trial of RTT is very worth it. Option Pit is still great….but VERY deep and takes a ton of cerebral work….especially if you think you know it all already (like I did).
The only update I’ll give is on NFLX. I made a solemn vow in @fuzzballl ‘s name that I would stick with this until I was even. I started at $358 a share and am now down to $272….that’s a ton of cost basis reduction! I’m accomplishing this two ways…. 1. using weekly debit wide broken wing put flies (Ed calls them “Venus Flies” for the downside collar, and. 2. using weekly covered calls to finance the flies. As you can see I’m still off the mark on break even….but I’m being mechanical with the income collection and tracking every cent against the cost basis. I’ve only got 100 shares of NFLX so the ride down has been manageable.
Hope we all get what we want from the market next year! This last year is one of those that seriously refines you as a trader. Survive….and you come out a much better trader.
Have a few that are way ITM now. Wish I had ratioed them in Oct. but too late now. Since you seem to be the only one with enough patience to take these to the end here are my questions
1. About how long does it take you to scratch the trade one ITM?
2. Seems like the best way to get any decent premium is to sell 43-45 DTE and reset at 22 DTE. Have you found that as well?
3. Once the new series of LEAP comes out does it make sense to roll the longs to the new leap for $3-4 or hang on to the one you have until the end?
I am debating taking some tax losses and resetting vs. hanging with the ones I have.
Did not think I would trade today but the continued market puke fest took all the time value out of a few of my positions.
MU rolled the 18 DTE 40/40 #fuzzy out to 39 DTE for 0.33 credit. Cb now 14.8. I suspect there is a lot of tax loss selling in the this and WDC and hope they will rebound in the new year.
I have some EXPE trades in the cue but the market makers are being greedy.
Also, even though my equity curve is now down, in my core account I have generated 17% cash returns over the last 12 weeks. As @kathycon I believe said below, equity is lower but cash is higher. Good to have some cash to use but this time I am waiting until I see a shift.
Maybe, just maybe that was the bottom this morning. The VIX spiked to 33.38 and hopefully that will mark the low. I was personally thinking we needed a vix spike 30-50 before a bottom. Of course it could go much higher but the last major dips were done when there was real panic.
All I want for Christmas is a Santa Claus rally 🙂
Adjustments, just doing my best to bring in income to offset the continued chaos.
GILD 2021 67.5/69 next week for 11.92. Have 113 weeks to manage.
EXPE 125/125/126 rolled the 1 DTE 126 out to 15 DTE for 1.00. CB now 13.88 and as above 113 weeks left.
XBI 2020 80/85 15 DTE rolled down to 80 at 43 DTE for 1.91 credit CB now 14.63. 61 weeks left to manage.
LNG 63 cc tomorrow rolled out 43 DTE and down to 61 for 1.97 credit. Cb now 59.27.
Bizarrely MU is up, go figure?!
As @kathycon said below, market is defying all patterns and seasonality this year, not quite and exact quote but close. Does the VIX need to spike to 50 before the selling is done? Who knows, trade smart, preserve capital, there will be big opportunities soon enough.
If the whippy settles down later my try some directional trades before the day is over.
Good luck, stay safe!
#Lophir Closed on GTC order: $AMZN 1820/1855/1885/1915 Lophir put trade for 4.30. Sold for 8.70 yesterday. The gap higher today made this only a one-day trade, although I think the very wide bid/ask spread on a trade like this can work in your favor on both ends, provided you can be patient and don’t force a fill. Thanks @kathycon for the idea!
Could someone explain what a #stairstep is and show an example?
STO Sep 280 put @1.35 x5
BTO Sep 305/295 put debit spread @2.12 x 1
Break even: 277.08 13.3% down from spot, 5x expected move
MamaCash, when you have a pre-earnings trade on and the stock pulls back, I understand that you add to your position. My question is do you add calls at the same original strike, or do you go down to a new strike at the appropriate delta?
WDC 77 put expiring this friday had decayed to 0.25 so rolled it to a #pietrades 25 DTE 75 ing to put for 1.03 credit.
Trying to ladder the EXPE 115 as well but with earnings scheduled for 18 DTE it is not decaying as fast as I would like.
Limited 3 week experiment on using 21 DTE or so for #pietrades seems to be working as I expected. The extra space makes rolling easier and if they stay OTM the decay is fast enough you can usually close or roll in 1-2 weeks.
$SPLK BTC 8/17 125 calls and STO 8/17 115 calls for 1.00 added credit
$AMZN STO 7/13 1600/1620 BUPS at 2.80
#SuperCharger Trying my first supercharger. Thanks to MamaCash on the input… Also, thanks to Iceman for his trade yesterday on NFLX, which I’ve added to the supercharger… a bear call spread above all-time highs that expires before earnings. Do we need a new name for a SuperCharger with a partial hedge?
Yesterday, Bought $NFLX July 6th 380/390 call spreads for 7.38, GTC order to close at 9.40.
Today, sold NFLX July 13th 450/500 call spreads for 1.90.
A lot of trades today, rolling down short calls. I started the week this morning with $22,516 in short call premium to collect. That provided a cushion for today, but of course it’s not a 100% hedge.
1. AMZN rolled the 1745 calls down to 1720 for this week, collecting $1661 on the original calls and another $7.25 on the new one.
2. Closed the SPX #UndieBear for $5090 profit, if you add Thursday’s $1290 profit onto this, that’s $6380 in 3 days. This was a small 2×1.
3. GS and QQQ: got the butterfly fill on my Put In/Out trades from about 10 days ago. This locks in partial profit and cuts risk on them. I start with a skip-strike in-and-out spread, then look to butterfly it w/ a broken wing for half the price of the first spread.
4. MU rolled down calls from 62 to 57.5 (25 delta) for $1523 profit on the original ones and an add’l $376 on the new.
5. TSLA closed out the put fly and put spread for around $80 profit I think, wanted to simplify book this morning.
6. SPY #Saf-T rolled Wed calls out to next wed, collected $1536 on this week’s calls. My protective puts on #Saf-T are up a collective $32,800. They are sentries for me right now.
7. MCD added a put diag to my #Undie to balance deltas and bring in some premium for next week, cuts risk.
Don’t get me wrong, big losses across the board here, but all these trades are easy for keeping your head on straight. Just collect the hedges and reset.
$SPX 2595/2620 BUPs Thank you @jeffcp66
$NFLX 352.5/357.5 BUPS Thank you @kathycon I know I should have had profit target hit but NFLX zoomed and I extended my stay. Did close the BUCS part of the trade early.
Everyone have a great weekend. Lots of graduations going on. On that subject, I feel I am getting a PhD in trading following all the exotic (to me at least) opportunities. Now to put it to work. Thanks to all.
$IQ BTC 7/20 25 calls and STO 7/20 40 calls at 11.50 debit
$TWTR BTC 7/20 40 calls and STO 7/20 44 calls at 3.00 debit
$FB BTC 1/2019 190 calls and STO 1/2019 205 calls at 8.50 credit
$ALRM BTO 7/20 40 calls at 1.40 Stock downgraded by GS.
$ALRM STO 7/20 37.50 puts at .85
$WYNN STO 7/13 167.50/172.50 Thank you @kathycon
$TQQQ STO 7/13 80 puts at 2.12 Thank you @jeffcp66
$KEM STO 7/20 24 puts at .80
$SQ BTC 7/6 58 put and STO 7/6 65 put for added 1.00 credit
Happy Friday Everyone!
I didn’t have a ton going, ‘cept for one big thing. That later.
IWM: #Saf-T 1000 shares called, net profit $1200. Reset 1500 @ 167.66, 14x jul 27 166 puts @ 2.10, Jun 22 168.5 calls x13 @ .70
I was squirming bad this morning with a ton of SPY shares on and no short calls against them. Luckily the market rebounded, I got some short calls for next Wednesday in the book. I can sleep at night when I know my short calls are on. I’m not kidding when I say it felt really uncomfortable not having them. I will change this strategy next quarter so that calls are always on regardless of dividends.
BA…ugly, but I’m not too concerned. Got lots of hedges on, got a put diagonal kicker, so far it’s looking like a retracement. Maybe even the handle of a cup forming.
Ok…beware when @kathycon MamaCash and I open the lab. We can stay up all night online battering trade designs about and running backtests. We are ALWAYS taking established designs, or other people’s ideas, and reworking them for the best success rates, highest profits, lowest risk.
We reworked the dates and ratios on #Undies last night. I think you should let us test these out a bit. But what we discovered by backtesting is that a 30day long with a 14 day short in a .66 ratio (3×2, 6×4, 20×13) yields a much higher return on margin than using the longer dates. Because the 30-day longs are cheaper, there is less risk, which directly affects the return. These trades go on with a slight positive gamma, slight negative theta, positive vega…so kind of nice greeks on these. All of the 1-year returns we are looking at are really high, like 300% to 1200% (return on margin risk).
Consider these “petri dish” trades right now…we’ll run ’em down and report on effectiveness.
Between the two of us we have a lot of 3×2 tests on now in NVDA, ADBE, BABA, NFLX…and some others. We will report on the effectiveness of this.
Here is an example of one I have on BABA: Jul 13 202.5 call 3x @ 9.20/Jun 29 210 call 2x @ 3.40.
Everyone have a safe weekend!
p.s. premium collection this week was $14,811, 90% of what I sold. Good week!
#SPXcampaign Doesn’t seem we will be pushing much higher this week…
Sold $SPX June 18th 2800/2825 call spreads for 2.05. These expire Monday.
Good Morning! Who agrees with me that the best commercial EVER was the Geico Wednesday (Hump Day!) camel?
So the #Saf-T trades are performing better than I expected, with very high degrees of protection. I have quite a lot of SPY that I had sold calls against for today, so the calls would be cleared by pre-ex-div tomorrow. They are in the money so I’m going to let the shares get called (if FOMC cooperates). Then I will clear and reset the 45-day 40-delta puts (protection is cheap again). I see that the Friday SPY puts have the dividend in them, so rather than hold shares for a div, I will sell a boatload of 1-strike ITM puts for Friday. Selling ITM puts is the same trade as a covered call, so this will be a way of getting the virtual dividend, coupled with extra premium that a call would bring in. Due to the upcoming drop in stock price on Friday for ex-div, I should get the assignment I want to re-populate the share position.
BTW, here is a pic of the price slices on my 3000 shares of SPY. Note the risk control in place on a 10% drop. A 10% market drop yields a 2% capped drop. This is great for higher yield cash storage…way higher than a CD/Money Market, but safe.
I’ll update here when my reset is complete, including the realized profit for the week on this trade.
Here’s a Hump Day remix….actually it’s a tad creepy 🙂
NFLX #supercharger Opened Jun22 352.5/357.5c @ 3.86 x2