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Opening: XBI Jan '25 77 Covered CallComments: This started out as an October 20th 76 short put (See Post Below) and then proceeded to crater quite massively, resulting in early, random assignment of shares. In an attempt to get my cost basis immediately within earshot of where the underlying is currently trading, I went extremely long-dated and sold the Jan '25 77 for 7.05 against my one lot, resulting in a cost basis of my original short put strike at 76 minus the 7.05 I received for the short call or 68.95 relative to today's closing price of 67.07. The Jan '25 77 short call finished the day at around 43 delta, and -- as with all my covered calls, I'll look to roll out the short call at intervals, with an eye toward keeping the short call at or above the 30 delta and/or leaving it alone if price pops back above my break even. Unfortunately, the position becomes somewhat "dead money" for a bit since the current next available expiries to roll to are limited to June '25, Dec '25, and Jan '26 (although I can certainly roll down intraexpiry if push comes to shove).
AMEX:XBILong
by NaughtyPines
Opening: SAVE January 19th 10 Covered Call... for an 8.15 debit. Comments: The IV in here is redonk (IVR 96/IV 238.6%), no doubt because the merger decision between SAVE and JBLU is in a court room, with the trial scheduled to finish up at year end and a ruling to follow thereafter. At the moment, the buyout proposal is for $33.50/share and/or a $29.80 "Deal-Through Price." While most are probably trying to arbitrage SAVE for the difference between current price and the potential buy-out amount, I'm looking to make money even if the buyout doesn't go through with a cost basis below SAVE's 52-week low and/or the judge takes a bit of time to mull over whether to impose conditions on the buy out (at which point I hope to be out of the trade). Naturally, if the deal does go through, and price jumps to the buyout price, I'll be pissed that I didn't go just Plain Jane long call ... . Metrics: Max Profit: 1.85 ($185)/contract Buying Power Effect: 8.15 ($815)/contract ROC as a function of BPE at Max: 22.7% ROC at 50% max: 11.3%
SLong
by NaughtyPines
Opening (IRA): IWM April 19th 165 Short Put... for a 2.10 credit. Comments: Starting to erect rungs in the second quarter (April, May, June). QQQ doesn't have an April yet, and I already have a SPY rung on out in that contract, so just doing the small caps here. Targeting the <16 delta strike paying around 1% of the strike price in credit. I'll naturally look to add in shorter duration should we get a bump in IV, but may have to dabble outside the broad market (IWM, QQQ, SPY) box to get paid something decent in shorter duration.
AMEX:IWMLong
by NaughtyPines
Opening (IRA): TLT Oct/Nov/Dec Short Put LadderComments: Targeting the 16 delta strike here in successive expiries to generate free cash flow and emulate dollar cost averaging into 20 year+ maturity paper. October 20th 89: .77 credit. November 17th 87: .76 credit. December 15th 86: .84 credit. Since these aren't paying buckets of cash on a per contract basis, I'll look to manage these on extrinsic approaching worthless either by closing them out in profit or rolling for credit and duration to reduce my cost basis further.
NASDAQ:TLTLong
by NaughtyPines
Opening (IRA): TLT Nov/Dec 86/84 Short PutsComments: Targeting the 16 delta strikes in November and December to erect rungs at strikes better than what I currently have on to emulate dollar cost averaging into 20 year+ maturity paper. November 17th 86: .83 credit December 15th 84: .79 credit Here, I'm fine with getting assigned and proceeding to sell short call against, but want to get in at the biggest discount the market will let me get away with because at some point, you know they're going to cut. Naturally, this may be months out in time ... .
NASDAQ:TLTLong
by NaughtyPines
Opening (IRA): TSLA January 19th 200 Covered Call... for a 191.76 debit. Metrics: Cost Basis/Break Even: 191.76 Max Profit: 8.24 ($824) Max Profit ROC %-age: 4.3% 50% of Max: 4.12 ($412) 50 Max ROC %-age: 2.1% Delta/Theta: 23.45/12.70 Here, selling the -75 delta call against a one lot in one of the higher IV single names (currently at 50.5%) to emulate a 25 delta short put, but with slightly better profit potential and a better break even than selling the same delta'd put outright. Naturally, I wish the underlying was weaker and the IV higher, but you can't have everything ... . The 25 delta short put at the 205 would bring in 7.25 or so in credit at the moment, with a 197.75 break even. This is relative to the maximum profit potential of the monied covered call with the same delta metrics with a max profit potential of 8.24 (almost $100 more) and an even lower break even some 6.00 below where the short put break even would set up. Naturally, this only makes sense in a cash secured environment where the buying power effect of the naked 205 short put would be 205 - 7.25 or 197.75 and the monied covered call -- 191.76 (that's 19.8 and 19.2k, respectively). On margin, the buying power effect of the 205 short put would be substantially less, which is basically why you'd stick with the naked short put in the vast majority of instances in a margin account. As far as trade management is concerned, I'll be looking to take profit at 50% of max and/or look at rolling the short call down intra-expiry (e.g., from the 200 to the 195) or down and out (e.g., from the Jan 200 to the Feb 195) should my break even at 191.76 be tested, thus lowering my break even and reducing my cost basis.
NASDAQ:TSLALong
by NaughtyPines