#fuzzyhotair #putratioladder AAPL put ratio…

#fuzzyhotair
#putratioladder

AAPL put ratio ladder update: ON SUSPENSION
(1×2 credit ratios, 30 delta/25 delta, with a BWB hedge to extend downside)

So I’ve seen this movie before. The last time AAPL split there was a mad run-up in stock demand and price (everyone scratched their head back then, as well). I can make more (with less risk) using collars on AAPL, vs put ratios. Especially since I keep cash allocation for short put assignment anyway. Plus there’s an ex-div on Aug 7th.
So here’s an update on the “rungs.”

Week 1: CLOSED
Aug 21 345/340 sold 6.70, bought 2.32
Wish I hadn’t closed this, the breakeven was super far away…should have let more juice drain off until 20 DTE (right after these words were published AAPL dropped from $400+ to the 360’s on anti-competitive news reports, so closing was a good move in hindsight)

Week 2: Closed on July 31
Aug 28 372.5/365 sold 7.12, put fly hedge 350/340/335 .90: Put ratio closed for 1.45

Week 3: Closed on July 31
Sep 4 360/355 sold 6.05, put fly hedge bought 345/335/330 for .93: Put ratio closed for 1.61

Week 4: Still open
Sep 11 360/355 put ratio sold 6.10, put fly hedge bought 345/335/330 for .99
Breakeven $335

Collars added: 100 share blocks + Sold Sep 18 420 calls @ 20.10, + Bot Aug 28th Put Debit Spreads 400/380 @ $3.99
Split will happen on Aug 31

#fuzzyhotair #putratioladder AAPL put ratio…

#fuzzyhotair
#putratioladder

AAPL put ratio ladder, week 4
(1×2 credit ratios, 30 delta/25 delta, with a BWB hedge to extend downside)

Week 1: CLOSED
Aug 21 345/340 sold 6.70, bought 2.32
Wish I hadn’t closed this, the breakeven was super far away…should have let more juice drain off until 20 DTE (right after these words were published AAPL dropped from $400+ to the 360’s on anti-competitive news reports, so closing was a good move in hindsight)

Week 2: Still open
Aug 28 372.5/365 sold 7.12, put fly hedge 350/340/335 .90
Breakeven $340

Week 3: Still open
Sep 4 360/355 sold 6.05, put fly hedge bought 345/335/330 for .93
Breakeven: $335

Week 4: opened using earnings volatility (earnings are tonight)
Sep 11 360/355 put ratio sold 6.10, put fly hedge bought 345/335/330 for .99
Breakeven $335

I make a practice of always having cash available for assignment on these, so about 3 rungs is the most I can have on this ladder right now. The week 2 position is down to 29 DTE….it is profitable now. Barring any disaster tonight I might be able to close it tomorrow. Though the positions are all staggered by date, they ARE clustered around breakeven. It would be better I think for more breakeven diversification….but the markets have been in some consolidation.

#fuzzyhotair #putratioladder AAPL put ratio…

#fuzzyhotair
#putratioladder

AAPL put ratio ladder, week 3 (1×2 credit ratios, 30 delta/25 delta, with a BWB hedge to extend downside)

Week 1: CLOSED
Aug 21 345/340 sold 6.70, bought 2.32
Wish I hadn’t closed this, the breakeven was super far away…should have let more juice drain off until 20 DTE

Week 2:
Aug 28 372.5/365 sold 7.12, put fly hedge 350/340/335 .90
Breakeven $340

Week 3–the Sep 4 expiration just opened today
Sep 4 360/355 sold 6.05, put fly hedge bought 345/335/330 for .93
Breakeven: $335

#fuzzyhotair #putratioladder Hi Guys! I…

#fuzzyhotair
#putratioladder

Hi Guys! I had ankle repair surgery last week….boy it’s been tough! Lots of pain and living on one leg! But was finally better enough this morning to add to my AAPL put ratio ladder. Adding on an up day like this….maybe not the best, but a 46 DTE expiration opened up this morning. (quick recap on my process: 1. delta 30/25 1×2 credit ratio 2. At the BE of that ratio I place a BWB (otherwise known as a venus fly or sumo fly) to extend the BE down a few more delta).

Week 1: Aug 21 345/340 1×2 credit ratio for 6.70 with a butterfly hedge
Current price: $3.375
Break even: About 319.60

Week 2 (placed today): Aug 28 372/365 1×2 credit ratio for 7.12
Butterfly hedge: 350/340/335 for .90
Break even: About $340, about 14 delta

The week one trade has realized 50% profit as of today….I’ll leave it sit a little while longer.

#FuzzyHotAir #PutRatioLadder I really like…

#FuzzyHotAir
#PutRatioLadder

I really like Fuzzy’s work on this. I’ve been doing loads of collars all year, but there’s times on a run up that I don’t want to chase the calls up, so I’ll let the position go. Then I’ll use some type of premium selling as a way to re-establish a position at a discount. Or if I want to add to a position, I can’t stomach buying at highs, but this is a great way to add in.

My favorite put selling strategy is a put ratio. My go-to is 45 DTE, buy 1x 30 delta and sell 2x 25 delta. THEN (since I’m more and more risk averse every year) I’ll often set a broken wing debit fly right at the breakeven on the put ratio to get me a few more $$ of break even room.

The part I’ve been missing though is the ladder dynamic of doing this campaign style.

I have a small AAPL collar position right now that I’ve been wanting to add into. I’ve been doing weekly put ratios on it, but I’d like to flip to a laddering style like Fuzzy laid out in his post yesterday. Why AAPL? It’s the driving force behind both SPY and QQQ…as AAPL goes, so goes SPY/QQQ. But it has higher volatility than SPY, so more $$$ (mo’ money ties into probability).

I’ll do one of these every week, here’s today’s trade (I chose Aug 21 strike at 50 days for liquidity, had problems with fills on the Aug 14 expiry)

Bought to open qty 1 Aug 21 345 put @ 9.34
Sold to open qty 2 Aug 21 340 put @ 8.02
Ratio net credit 6.70, break even: $328.24 (roughly 18 delta)
Additional butterfly (hedge):
Aug 21 330/320/315 @ .97 debit
New breakeven: $319.69 about 13% down, 15 delta

I acknowledge the butterfly hedge eats into profits, but I’m happy w/ the trade off for the extra wide profit structure on these. Plus this is a much more complicated way of executing Fuzzy’s idea, but I really like the risk/reward on it.

fuzzy

SPY and learning put selling (weekend reading)

First off, I apologize for the length of this but it might be entertaining if we get a long, wet, locked down 3 day weekend. I’ve got a friend who’s still about 4 years from retirement but has a sizable nest egg (1.2 million). He was interested in maybe learning a little bit about the option market in hopes that there was something he could do in retirement to live off of safely but not have to watch the market every single day. I came up with a plan (3 parts) that serves 2 purposes. It lets him learn option basics as well as experiment to see if it brings in enough to live on and be within his risk tolerance. I’ve been paper trading this for a month now (TDA will turn on live quotes in your paper account if you ask them). It’s been a choppy market which is nice and the plan is going about how I imagined. The true test will be the next big panic selloff but based on what this last selloff was like I think it will do fine.

Any thoughts, ideas, or comments are welcome. I’ll post a current screenshot at the bottom of where we stand so far and break it up into 3 or 4 responses down below. I’m hoping to continue this for the foreseeable future to really get a longer term feel for it. Here we go!

#fuzzyhotair