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Premiumselling

Opening (IRA): TLT October 27th 91 Short Put... for a .96 credit. Comments: Adding on weakness, targeting the strike paying around 1% of the strike price in credit in the contract nearest 45 days duration. This is more aggressive than I usually do, since it's at the 30 delta, but I'm looking to pick up shares at or around these lows if at all possible. Because of this, I'll look to run these right up until expiry and/or take them off for "approaching worthless"; I immediately stuck an order in to close it if it gets to .05. If I get assigned, I'll look to cover with short call.
NASDAQ:TLTLong
by NaughtyPines
The Day Ahead: Premium Selling in IWM, QQQ, FXI, GDXJ, SMHIt's Fryyyydayyyy ... (which is when I tend to do all my "stuff"). Well, unless you've been hiding under a rock (no judgment here), you'll know that premium-selling in broad market isn't very good here, with IWM IVR/IV at 12.3/19.7%, QQQ at 9.1/20.1%, and SPY at 6.8/14.4%. That sub-25 IVR is telling you that broad market IV is in the bottom quarter of its 52-week range which for premium-sellers is kind of drag. Your premium-selling options in this environment (at least from a premium selling perspective) are to (a) do nothing; (b) sell your go-to delta and duration for whatever the market is paying, knowing that you might get assigned at the strike or have a poo pile to manage toward expiry; or (c) go longer-dated to get paid something decent with the probability of profit (POP) and or probability of touch (POT) that you're used to. Since I'm trying to create cash flow here (at least in the retirement account), I generally opt for (c), since I'm not fond of cleaning up poo piles with a great deal of frequency and like high POP/low POT. With that goal in mind, I generally target the shortest duration <16 delta strike that is paying around 1% of the strike price in credit. Currently, the shortest duration <16 delta strike paying that in IWM is the December 15th 164 (14 delta, bid 1.65); in QQQ, the December 15th 325 (14 delta, bid 3.26); and in SPY, the Jan 19th 400 (16 delta, bid 4.24), so I'll look to add short put rungs in those durations or greater. Because broad market sucks so hard though, I'll also be venturing out into the exchange-traded fund space to see if I can scrounge up any premium there. Currently, FXI (IVR 11.3/30.8%), GDXJ (7.6/30.3%), and SMH (17.6/28.7%) are at the top of my screener when sorted for 30-day IV, but you can see that IV is also at the low end of the 52 week range in that space, too. The ideal is to sell in both high IVR/high IV with IVR >50/IV>35% for ETF's, but there is nothing currently in the space with those metrics, so -- as with broad market -- you're options are the same: (a) do nothing; (b) sell your go-to delta/duration with the chips falling where they may; or (c) sell longer duration with your go-to POP/POT. Here are the shortest duration <16 strikes paying around 1% of strike price in credit for these underlyings: FXI, Dec 15th 22.85, 13 delta, bid .29 (don't know what the odd ball strike is about). GDXJ, Nov 17th 29, 12 delta, bid .31. SMH, Nov 17th 130, 13 delta, bid 1.35. I would note that there is a highly options-liquid ETF with >50% IV, and it's TQQQ, with an IVR of 17.3 and a 30-day IV of (wait for it) ... 70.5%. It's a leveraged instrument, so I would exercise caution trading it with the expectation that, for example, the 16 delta (the 2 times expected move strike in non-leveraged stuff) is a "safe" strike to sell with limited assignment risk, a high probability of expiring worthless, and/or not being an in-the-money headache toward expiry. As long as you're familiar with all these "warts," it's probably okay to play small. That being said, it won't be particularly buying power efficient on margin; it looks like my broker's requiring that it be cash secured (most underlyings require 20% of the strike price or thereabouts in buying power), so the buying power requirement makes it "less sexy" in spite of its high IV. Lastly, I would be neglectful were I to not mention the single name space for premium-selling here, but my general order of preference in selling premium (particularly in the retirement account) is (a) broad market; (b) exchange-traded funds; and (c) single name (in that order). Here are the top 30-day IV, highly options liquid single name underlyings at the moment that are trading at >$20/share and with a 30-day>50%. There isn't a ton here and (as with everything else), IV is at the low end of its 52-week range (I mean 1.0? c'monnnn, you're killing me here, smalls): AFRM (Tech/Software)), IVR/IV 1.0/75.5% RIVN (Automaker/EV), 5.5/65.5% TSLA (Automaker/EV), 11.3/52.7%
AMEX:IWM
by NaughtyPines
Opening (IRA): IWM Jan 19th 157 Short Put... for a 1.58 credit. Comments: Targeting the <16 delta strike paying around 1% of the strike price in credit to emulate dollar cost averaging into the broad market. As I mentioned in my earlier post (See Below), shorter duration is probably paying, but I already have rungs on in the Nov 17th, Dec 15th, and Dec 29th expiries, so going out to 2024 here. Naturally, I'll sell in shorter duration if I can get in at strikes better than what I currently have on.
AMEX:IWMLong
by NaughtyPines
Opening (IRA): QQQ December 29th 297 Short Put... for a 3.00 credit. Comments: Rounding out fourth quarter rungs in the Q's here, targeting the <16 delta strike paying around 1% of the strike price in credit to emulate dollar cost averaging into the broad market. Shorter duration (i.e., November) is actually paying at or below the 16 delta strike, but already have rungs camped out there (although I still may squeeze some in there in the weeks ahead if it's productive). Will start to look to peel off shorter duration rungs as I come to them, although I only have a couple of October rungs left, with the majority being out in November and December.
NASDAQ:QQQLong
by NaughtyPines
Opening (IRA): SMH November 17th 122.5 Short Put... for a 1.34 credit. Comments: Adding a rung out in the November monthly so that my October rung doesn't look so lonely ... . It's actually because SMH 30-day IV is still fairly decent at 31.6%; the only options liquid ETF's with better IV are GDXJ (35.2%) and FXI (32.0%). Targeting the <16 delta strike paying around 1% of the strike price in credit to emulate dollar cost averaging into the semiconductor exchange-traded fund.
NASDAQ:SMHLong
by NaughtyPines
Opening (IRA): SPY November 17th 390 Short Put... for a 4.10 credit. Comments: My weekly, broad market short put targeting the <16 delta strike paying around 1% of the strike price in credit. As usual, will look to add in shorter duration should it start to pay more decently. Relatedly, I'm fine with taking assignment of shares and selling call against, but will attempt to stay in options as long as possible, rolling for strike improvement and a credit so long as that remains productive.
AMEX:SPYLong
by NaughtyPines