So here's the fucked up thing.. The exact same thing that caused me to shift from long in mid 2018 is happening again. It's just a self-created indicator I've used for a long time and it usually has YEARS in between signals. It leads SPY by a little bit. It's not "the big one" but makes me feel like SPY is going to $260 in the short term. Selling puts around there now (so I get assigned long if it expires ITM). Probably wrong. If I end up being right here, then I'll delete the other post where I said SPY going to $320 (THIS IS A JOKE I DIDN'T DO THIS)
I'm still trying to figure out the best way to do this. I don't want to time the market. Once I have a target, I just kind of close my eyes, sell the puts and wait. Any suggestions on how to get better timing? Advantages of doing it now: I get paid even if I'm wrong Disadvantage: obvious. Edit: to be clear, I'm talking about puts a few months out. Not weeklies.
All I can tell you is if you are right, your strategy will lose money. The put you sell today will explode as the SPY falls. Maybe if you do not have a good understanding of that, sell options is not a good idea at this point. Good luck.
Ah, I see what you're thinking. I sell the puts so that if it expires ITM at that time, I get assigned the long position. Not worried about making huge money on the puts (except a little bit). Does that make sense?
OK let's say I want to go long SPY at 260. There are two ways to do this: 1. Set up an alert in IB, wait 2. Sell a put, wait for assignment I opt for 2, gives a little extra money. No?
NO. July 260 puts went out at about 2.25 yesterday. The 287 puts (ATM) were about 7.45. If the SPY were to drop quickly to 260, implied vol would be much higher so the put you sell at 2.25 would be much higher than 7.45 if that were to happen quickly cause an unrealized loss of well over 5 points. Again, you should understand this before trading options.