good trade. the whole consumer discretionary sector has been selling off for a while. - you have outlined a hedging strategy for your long portfolio, i.e. using mdy trackers - what would you consider as a hedge for this short strategy? my guess is that your long strategy returns profile is not quite symmetrical with this short one.
I gave up finding a perfect hedge, instead I trade multiple strategies at the same time to provide ample diversification. I allocate 75% to the longs and 75% to the shorts for a total of 150%. I use the rest of my leverage (max 2x) to short Calls. Liquidity in the options market is drastically lower than in stocks, for that reason I don't run this strategy on the website yet.
Covered MDR Oct 50 Call at 0.15 from a 2.6 entry for a $245 gain per contract. Covered PD Oct 95 Call at 0.15 from a 4.1 entry for a $395 gain per contract.
Exited the following today: ESRX Oct 85 Call at 0.4 from an entry of 3 for $260 profit/contract DO Oct 80 Call at 0.6 from an entry of 2.95 for $235 profit/contract DVN Oct 65 Call at 1.1 from an entry of 2 for $90 profit/contract
Is there a criteria for minimum $ amount per option contract before you are willing to sell it? For example, you will not sell any option that is less than $2? Thanks
Not a $ amount, but a yield. Lets say I am looking to sell a call with a $50 strike I would want to get at least $1.5 premium, which is a 3% (premium / strike) yield. The option must be OTM and 30-60 days till expiration. I am currently focusing more on my stock trading so this thread might be on pause for a while as far as new entries go.
this melt up has been a time period where selling naked calls could have been painful. i would say it is a good test of your strategy. so how is it going?
One bad trade will do that. At least with Credit Spreads you know your maximum risk and can plan for worst case scenerio. Naked Calls different story.