Selling Calls To Take Advantage of SPY Drop to 82 By 18-Sep

Discussion in 'Journals' started by shortie, May 31, 2009.

Chances SPY Will Drop To 82 By Mid September

  1. Virtually Impossible

    6 vote(s)
    8.0%
  2. Unlikely

    8 vote(s)
    10.7%
  3. Possible

    13 vote(s)
    17.3%
  4. Likely

    25 vote(s)
    33.3%
  5. Sure Thing

    16 vote(s)
    21.3%
  6. Yet Another Fool Ready To Part With His $$

    7 vote(s)
    9.3%
  1. Is it worth the extra risk of the market moving down sharply again for those premium (time decay)?
     
    #51     Jun 15, 2009

  2. there is quite a bit juice left in those premiums. i think it's worthwhile to wait 3 more days. there is always risk...
     
    #52     Jun 15, 2009
  3. just watching the paint dry. i probably won't trade until a larger move takes place. still contemplating whether i should partially hedge the risk of a large drop in the market. if i do that, my current top choice is to short ITM July calls. July 90 Calls trade for 4.20 right now - plenty of juice.

    the midday update is to illustrate portfolio fluctuations and effect of option decay.
    [​IMG]
     
    #53     Jun 16, 2009
  4. You keep the $2k from 90.40 to 95.20. Neutral at 93.00 at a max gain of 3,800, including gains to date.
     
    #54     Jun 16, 2009
  5. thanks, atticus. it is good to have reference points as far as max PL, b/e, etc.

    today maybe i leaned a bit to the greedy side. added -2x June 91 puts during midday drop. then watched the market climb thinking i will short a couple of ITM July calls for protection "once the market climbs a bit higher...". well, it never did.

    now with my strangles complete i will be selling July calls on any upside (if it comes) - this is easy. now if we have a DROP tomorrow, i will have to improvise based on what i see. :confused:

    [​IMG]
     
    #55     Jun 16, 2009
  6. Those premiums don't come without risk :)
     
    #56     Jun 16, 2009
  7. heheh, indeed.
     
    #57     Jun 16, 2009
  8. waited out the drop this morning. at some point unrealized PL dropped to +1400 or lower. now that the market is moving higher i started to short July ITM calls for protection against a drop.

    Midday update:
    [​IMG]
     
    #58     Jun 17, 2009
  9. hug

    hug

    why dont you buy back the 94 call ? you won more than 90% of the initial sold premium ...
    by buying them back, you offset a nice risk
     
    #59     Jun 17, 2009
  10. i did not think about it this morning. in fact, they traded 0.11 so it may have been a good idea to close them.

    on the other hand, this morning spy was <91, so from that point to reach 94 it would have to gain 3.5% - that's a lot to gain in two days.

    now i think it is good that i did not close them because i do have short puts that offset those calls. with strangles in place i want to have as many options as possible to expire worthless.
     
    #60     Jun 17, 2009