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Shortputvertical

Opening (IRA): SMH January 17th 130/225 Short Put Vertical... for a 3.40 credit. Comments: Adding to my SMH position on weakness, but using a setup with a lower buying power effect (BPE). Here, I'm selling the 25 delta put and buying the put that is at a strike that is approximately one half the value of the short put strike to bring in the buying power effect by about half over going with a naked short put. The standalone 225 would cost about 221.54 to put on versus the 91.60 in buying power for this trade, with a resulting bump in ROC as a function of BPE. Metrics: Buying Power Effect: 91.60 Break Even: 221.60/share Max Profit: 3.40 ROC at Max: 3.71% (versus 1.53% for the naked) 50% Max: 1.70 ROC at 50% Max: 1.86% (versus .77% for the naked) Naturally, the warts on this setup is that I remain subject to assignment risk at the 225 strike, so need to keep that in mind as I put on trades, since BP will have to be free in order to accept assignment of a one lot at 225.
NASDAQ:SMHLong
by NaughtyPines
Opening (IRA): MSTR Dec 20th 75/155 Short Put Vertical... for a 5.43 credit. Comments: High IVR/IV at 61.1/113.9. Doing something a little different here, selling the 10 delta short put and buying a put that cuts BPE in about half over doing a naked. Going low delta because, well, the underlying kind of scares the poo out of me. Metrics: Buying Power Effect: 74.57 Max Profit: 5.43 ROC at Max: 7.28% 50% Max: 2.72 ROC at 50% Max: 3.64 Compare: Dec 20th 155 Short Put (Cash Secured) BPE: 148.30 Max Profit: 6.65 ROC at Max: 4.48% Will generally look to take profit at 50% max.
NASDAQ:MSTRLong
by NaughtyPines
Opened (IRA): SPX January 14th 4020/4070 SPV*... for a 4.80 credit. Comments: A late post from Friday, since I reached my posting limit scrambling around doing defensive rolls in my margin account, as well as opening up some new positions in my IRA. Selling the 16 delta, buying the long 50 strikes out from that on "weakness plus" (i.e., weakness plus higher implied volatility). Generally, I'll look to ladder these out at intervals, assuming SPX implied is still there (it finished the week at 31.6% for the 30-day -- nearly twice what it was at the beginning of November) and take profit at 50% max. Smaller accounts can consider selling spreads in SPY with similar delta metrics (e.g., SPY January 21st 399/404 short put vertical, paying .51). * -- Short Put Vertical.
SP:SPXLong
by NaughtyPines
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