Selling Calls To Take Advantage of SPY Drop to 82 By 18-Sep

[shortie]

The purpose of this journal is to organize my trading, learn a bit about options and make some $$. I hope I am not asking for much here .

My strategy will be to sell SPY options based on my market bias.
I plan to start next week by selling SPY Calls as indicated by my current bias in the title.
The initial position will be increased/decreased and/or protected by selling SPY Puts as needed.

The success of this short journey will be dependent on:
1) my ability to predict market directions
2) the fact that the majority of options expire worthless
3) exellent input by ET community

 

[gkishot]

Quote from shortie:

The purpose of this journal is to organize my trading, learn a bit about options and make some $$. I hope I am not asking for much here .

My strategy will be to sell SPY options based on my market bias.
I plan to start next week by selling SPY Calls as indicated by my current bias in the title.
The initial position will be increased/decreased and/or protected by selling SPY Puts as needed.

The success of this short journey will be dependent on:
1) my ability to predict market directions
2) the fact that the majority of options expire worthless
3) exellent input by ET community

Regarding point #2 the further out of the money calls you will write the less will be your benefit from such a big move that you are predicting. Hope that qualifies for #3.

 

[shortie]

Quote from gkishot:

Regarding point #2 the further out of the money calls you will write the less will be your benefit from such a big move that you are predicting.

i am assuming the decent will be slow and that we may still have some upside before the downward move starts. so, i am thinking to start by selling ITM June calls and be very aggressive in protecting the position with short June puts.

 

[gkishot]

Quote from shortie:

i am assuming the decent will be slow and that we may still have some upside before the downward move starts. so, i am thinking to start by selling ITM June calls and be very aggressive in protecting the position with short June puts.

You do not actually short the market. You are market neutral.

 

[kxvid]

I hope your not depending too much on #3.

 

[atticus]

There are many methods to sell vol directionally, but selling naked calls shouldn't be at the top of the list.

 

[shortie]

Quote from gkishot:

You do not actually short the market. You are market neutral.

i plan to be net short calls on average, but cycle through short puts to protect myself (and/or lock in some profits) in case i am wrong on market direction.

 

[ammo]

in spy the jun 93/80 call sprd closed at 10.50 ish, your risk is 2.50 , simple way to trade low risk, while learning about options, you are selling premium ,taking overnite protection. You can lift the 93 long call intraday on the sell days and put it back on at lower prices, to increase your profits, and on the rally days ,you can lift the 80 short call and put it back on at higher prices.

 

[Wayne Gibbous]

I wouldn't say that short puts offer "protection" against a large and sustained move up in SPY. The only protection is prem received. The way you seem to be doing it, you might as well do some condors (or other credit spreads as has been mentioned). At least then your max risk is quantifiable.

Bulls seem unstopable these last few months. If SPX rockets up to 1100 or whatever you are going to get nailed.

How ever it goes, good luck!

 

[shortie]

dipping my feet:
short 2x 94 June Calls @2.50