selling a spy option
- Thread starter met1989
- Start date
yes & no
do a paper trade for the next 4 weeks to see if it worked, if it does, then put real money to it
This must be the most common SPY options trade that everyone starts with, loses money, then abandons.
There are also some ETFs doing this so that you can just hold a put-writing ETF and don’t have to go through the trouble (anything that simple and common will be automated by an ETF). But no ETFs make more money than SPY itself, so just hold SPY and check your balance 10 years from now.
Some ETFs selling SPY puts have closed because they weren’t making money and weren’t popular. Basically this has been done and tried in every way possible.
There are also some ETFs doing this so that you can just hold a put-writing ETF and don’t have to go through the trouble (anything that simple and common will be automated by an ETF). But no ETFs make more money than SPY itself, so just hold SPY and check your balance 10 years from now.
Some ETFs selling SPY puts have closed because they weren’t making money and weren’t popular. Basically this has been done and tried in every way possible.
Last edited:
^^ that
compare the performance
https://www.splithistory.com/spy/
https://www.splithistory.com/?symbol=upro
https://www.splithistory.com/?symbol=SPXL
but my idea id that if it expires ITM i will hold there shares till there back at the price i got them
you can look at it like real estate u buy a house if you can't sell it you rent it out and hope that the property will go up in 2/3 years at least the s p 500 has a return of 5% a year so for sure ill make 5% more in one year from the day i got those 100 shares
buying spx im left with nothing only a cash debit or credit no actual shares
so you still think its a bad idea ?
Yes, this is the same idea that every SPY options trader has tried, because what else can they do?
Put writing ETFs do this a little differently but their goal is the same, so they achieve the same results using SPX options and without holding SPY. But every idea of this type has been tried, tested, backtested in every way possible. Anything that would’ve worked would’ve been implemented by an ETF, whether index-based or SPY based.
I’m actually tired of replying to the same idea, and it has been discussed here many times, and a million times everywhere else. Search for The Wheel options strategy.
in theory anything is possible, its only when real money is on the line does it mean anything.
take if from me a 73 year old that's weathered the storms of 50+ years of investing in many things - 'past performance is not indicative of future results'
you've seen the responses, so, if you have convinced yourself its a good trade, go do it, you are in the drivers seat.
as I posted up thread, paper trade this one week at a time for 4 weeks & if you are still convinced 'put your money to it'
if you have 25 years to buy & hold you'll likely be OK.
As the market goes down, which strike do you intend to sell?
If you get assigned at 290 and then you sell a call at 300, you're good for that month but what if your shares reduce to 250.
You can sell 300 again but it won't be worth as much.
Then market goes down to 230, what do you sell.
If you sell close to the underlying then you could be called away, locking in the loss on your shares.
That or you have to roll up each time it gets close.
The strategy is called The Wheel.
It can work. I doubt it's automated in the way you suggest. I also think OP is vastly over estimating how much they'll make off it. For a single wheel with 100 shares of spy OP won't be seeing that much. Implied vol for ATM options on SPY has been dropping unless you head way out in expiration. Since OP is implying selling weeklies there's no way with 100 shares OP will make the money they're suggesting.
FWIW it looks like ATM weeklies might net OP around 350 dollars a week. Or around 1%. Of course the problem is that OP will need 30,000 to hold SPY as of this morning. Very capital inefficient. They may be better doing a similar strategy with LEAPS to reduce capital requirement but implied vol could reduce profits since the market is calming down but LEAPS still have fairly aggressive IV levels.
Last edited: