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Bad timing since I had to sell early Friday but made it through with that final hour rally. Had to wait until the end to sell again though which cost a bit. Set the new strikes in the 4000s but only for about 25% more than the usual premium.
Why did you choose this strategy?
Heading to FinCon in Austin TX today. Let me know if anyone else is there and wants to connect!
Hello there, first of all I'd like to say a big Thank You for sharing your spx put option strategy!
I've paper traded this strategy for three months before starting live trading (for about another three months now!)
A few questions with regard to the current market conditions:
1)For the last two weeks (CPI data, Witching day, Fed meeting, China Evergrande...), I've switched to delta 0.01-0.02 range as opposed to delta 0.05 with a pretty decent premium ($1.00 was my target). I've also increased my size of contracts (still under my comfortable leverage). With that my weekly premium has increased for about 50%. Would you consider this a safe strategy when the market is volatile?
2)Further to the question above, since my delta was a lot lower than usual and IV being quite high, my put option price typically decays quickly to $0.05 the next morning leaving me to think if it would be a good idea to close my positions and open new positions with one day to expire. Seems risky?
Over the last 6 months or so, I've learned a lot from your blog. So thank you again for sharing this great strategy!
J
I'm still new to this as well but from what you described about choosing lower delta but more contracts: The danger will be if you get tested on the downside and end up with more delta exposure compared to just selling one contract with the higher delta. I've been testing selling a call as well with the same delta to hedge my delta but the put vs call skew is more favorable with puts when selling premium on SPY.
https://marketchameleon.com/Overview/SPY/VolatilitySkew/