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Any idea why MHD jumped up today even on ex-div date?
@navypack to me it looks like normal price fluctuation that happens to be about equal in size to the dividend. NMZ also opened higher on Monday despite it being the ex date.
@navypack That is unusual especially given how prices typically drop after the dividend comes out. It looks like the ~2% rally started Friday morning but dropped at the close then bounced back Monday. I'm guessing some of this volatility is partially from illiquidity due to it being a smaller fund.
I did see some of the ratings agencies upgraded NY's state credit outlook on Monday which is the biggest holding of this fund (10%). I wouldn't have guessed that alone would lead to a 2% gain though. Bonds overall did gain last week with yields dropping to a 3 month low, but this fund was down slightly. Perhaps, it took awhile for this less liquid bond fund to "catch up".
Pretty rich premium today for the Jun 17 Expiration (=June 18 open), so 1.5 days to expiration. Targeting 0.80 premium now with strikes in the low 4,000s.
@earlyretirementnowcom thanks for the heads up ERN. Didn't get a chance to see what was being offered today but looks like the VIX did have a small jump
@alex Whoa! Walked my strikes down to 3,900 and 3,925. And that's for the Friday morning SPX open. Should be easy money, even if there's a bit of Fed-induced uncertainty now.
@earlyretirementnowcom Wow! You have over 5% buffer between the close and strike. I remember you mentioned this in an article but the self correcting factor from the VIX is there. Once the fear is in everything adjusts according. The main risk is that pivot point where it turns down
Had a hard time prior to getting anything unless I got within 1%!
@earlyretirementnowcom I can't believe how high the premiums are for Friday morning expiring options vs afternoon. At different points after the fed number, yesterday it seemed like the 1.5 DTE options had 80-90% of the premium of the 2 DTE options.
@figuy1 Yeah, I made a nice pile with the Friday morning options. And then on Thursday, I double-dipped and sold the Friday afternoon expiration as well.
BigERN --- thank you for creating this wealth of information. Been following your website & blog more recently and love your content & navigating around nuances of finance & life. First post for me here :))
Two questions:
1. How often do you see this very front-vol spike. FOMC + Triple witching risk?
2. How do you manage your leverage / risks during such times? I am suspecting that you will go lower delta + increase a little based on the way you've shared in your Option series.
Feel free to branch to another article if necessary. I'm new so might be not as tactical in where to best discuss 😛
Looks like VIX remains high for today (6/18/2021 Friday). Does anyone have any insight into the pullback today?
@charlie02 Uncertainty about Fed policy, i.e., possible inflation shock and faster than expected rate hikes
For those whose accounts are big enough to only sell 1 contract at a time, what's your closing strategy? Ideally, I know one should let them expire worthless, but if you do that you lose out on a day of trading.
For example, I sold the options that expired this morning(Friday) but my margin account will not be replenished until Monday
Another example would be if I sell the W options and let them expire worthless, I won't be able to sell the F options until my account gets replenished on Thursday.
I've been setting limits (buy to close) orders at either $0.05 or $0.10 but would love to hear what others do.
@mpaziran do you have portfolio margin?
When I had smaller account, I would just trade a vertical to reduce the margin impact. I liked having downside protection better than buying to close trades for $0.05.
@navypack I don't think I have portfolio margin (just a regular margin account). I'll have to do more research into that. Thanks!
Actually I was able to call Fidelity and they did confirm I do have portfolio margin.
@mpaziran my SPX puts take about 45-50k of margin per contract. Back to your question, simple answer is to buy back the old put and sell the next 2DTE contract.
@mpaziran Another route is to trade 2 ES contracts for a while until you’re up at $150k or so with portfolio margin. Requires you to hold a bit more cash but the margin requirements are lower (~12k per contract). Allowing the contracts to expire more than offsets the higher fees on the futures contracts since you now avoid the $5 buy to close.
@mpaziran There was a comment in one of the posts recently with a similar question. The margin requirement should never be an issue. I like to keep at least 3x the minimum margin, so having twice the # of contracts around for a short period will not be a problem. If people have only $50k to short one single put and the margin requirement is ~$36k, you have way too much exposure. Target at least $120k-$150k in equity per contract or trade smaller contract sizes. Or trade spreads.
At 1030 EST, sold Monday 4000 Strike for $1.50, which was 3.2 delta and 23 IV. Market was at 4183
@earlyretirementnowcom certainly should hope so! Rule set when retired vs still working would be interesting discussion!