Obviously, "safe" is rather relative, but I imagine things that take advantage of selling premium in a hedged manner could benefit. Obviously, any play requires strong assumptions. One such assumption is that this will be over in a few months at most; so it seems that there should be a way to profit off of IV eventually dying down, and one such way to do that is with a calendar spread. A put calendar spread could allow the front month to continually expire, and if the strikes are sufficiently high enough, say at 500, or even 100, then you could keep selling elevated premium until IV crushes and then you cash in the long put. Obviously, if the short put goes too DITM far earlier than expected, the play goes against you, so this only works if you think in the short-term the prices will remain elevated and you can keep raking in short puts. I bought GME@200 calendar spreads earlier for this week and last week and was able to flip them from 15 to 35...I did not hold until tomorrow's expiration because I got spooked by the volatility; one thing that surprised me was that as the stock price went up, the breakeven point in the simulations also kept going up... the IV of the next week was increasing so much! Is this "skew" since the spread graph was not a symmetrical point but kind of tapered off to the right? If GME expires with the front week OTM I will be remiss; I almost managed to buy the short call back for cheap today but with the brokerages being buggy I missed my shot at having a few open call options on GME going into next week... Are calendar spreads a safe-ish play? Perhaps a put spread, or a straddle calendar spread instead would best profit from IV? Or would you rather do a reverse calendar spread with all this IV? I imagine selling a DITM call would eventually bear fruit so long as you kept delta managed...Assuming natural value of GME should be in the low double digits.
I did a similar play in AMC this week doing a calendar on the $6 put. Broker then issued a statement for closing orders only so exited at a profit of $15. Would have liked to have run a campaign calendar on it. By this buying in the expiring option on its last day and selling the next weekly against by long back dated put hoping after a few weeks to be long the put where the basis is now making it a free position. Only other thing I can think of is selling an iron condor. You can always roll up the untested side and in such high IV a couple of rolls can net you more premium than the initial risk. Had this on in GME but once again once exit only couldn't roll up as they were new positions so just exited on a scratch. I'd say calendar is a safe play as you can't lose more than the premium you pay for it. On the DITM you can buy a call or put spread and they will go to full carry but you're gonna have to give up some to exit versus just selling the deep otm call or put spreads and if you go full carry and let both expire in the money you're going to pay exercise and assignment fees. You could sell a very wide wing iron fly as well. Or a buy a put fly with very wide wings all cheaper to do than buying the puts outright. Fills are horrific though. IMHO.
lol, it's likely to be profitable but the off chance off being margined by additional volatility says no. But, I did think about the reverse calendar on it; sell the long dated call that's sure to be OTM, and buy the near term to ride out until the bubble bursts?
The risk of trading outright vs spread is quite similar. If you don't know when to press the buy button first, when to press the sell button first, and when not to trade, trading spread is very risky too! The best solution is to give up trading. The major problem with the speculative bubble is not because traders will lose tons of money but traders unable to earn tons of money! When the bubble burst, there will be heavy volume/traffic. Charts & trading platforms would freeze. the market movement could be chaotic making trading difficult.
I think this is important. More I read about career successful traders there are times they aren't that active. Waiting for opportunities.