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Hi Ern,
With current strategy premiums are constant around 1/0.7$ as well as leverage (let's say 3x). This leaves us today with margin requirement touch above 100k and expected annual profit around 5/6%.
But when SPX doubles and margin requirement is 200k, premiums per contract would stay same1/0.7$ essentially lowering annual profit.
Is this strategy feasible in the long run if SPX will keep rising and raising margin requirement, or I am miss interpreting something?
Thanks,
John
If the S&P doubles, you'd also get twice the premium for a put at a certain % OTM at a given implied vol. So, you'd have to sell only half the # of contracts to ensure a given required income.
Right! Got carried away selling 1$ premiums for some time trying to keep delta as low as possible and forgot about time value.
Have you increased your premiums for current spx at 3400? What are your entries and deltas for today 7/10? I've got 3290 with delta 2.5 and ±5% time value at 1$.
Thanks
I haven't increased the premiums yet. It's my way of slowly taking less risk during tumultuous times. 🙂
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