Selling Premium on ES
- Thread starter tnatrader
- Start date
Bought back all those short puts earlier today. Officially banked $7925 for June for a 17% annualized return. Sold a 4280 put exp Jul 2 which was atm when I sold it, but after a late day rally I sold another 4295 put exp Jul 7. May be dumb since vol should return after the holidays, but gotta layer in the deltas even at this shitty vol.
Call me a 4d contrarian, but I don't see a market crash, maybe a 5-10% correction to keep everyone honest, but we will be grinding higher into year end. There's just way too much money in the system--just look at Fed's reverse repo facility.
I've been thinking about people buying long term sovereign debt at essentially negative real interest rates and it's similar to all that real estate in NYC or Vancouver etc that stays empty. Billionaires/sovereign funds don't care about making money as much as preserving it. At a certain point, banks are not as safe as Euro or dollar denominated sovereign debt or real estate in stable economies when you got billions and trillions lying around. They really don't care whether they make money on them, for them it's basically a giant safety deposit box that they can stuff their money into and can access without worrying about geopolitical stability. From this lens, the modern economy starts to make more sense. US/Euro governments won't rock the boat with billionaires since they are essentially financing the welfare state which kicks back enough taxes for the US military to keep the whole meta-structure stable.
This also explains low productivity and growth, particularly in the EU.
Back off the soapbox--if we rally, looking for the 4295 put to go below 25d and I'll add another one. If we drop enough, move to a longer time frame and lock more in at around 25d.
Call me a 4d contrarian, but I don't see a market crash, maybe a 5-10% correction to keep everyone honest, but we will be grinding higher into year end. There's just way too much money in the system--just look at Fed's reverse repo facility.
I've been thinking about people buying long term sovereign debt at essentially negative real interest rates and it's similar to all that real estate in NYC or Vancouver etc that stays empty. Billionaires/sovereign funds don't care about making money as much as preserving it. At a certain point, banks are not as safe as Euro or dollar denominated sovereign debt or real estate in stable economies when you got billions and trillions lying around. They really don't care whether they make money on them, for them it's basically a giant safety deposit box that they can stuff their money into and can access without worrying about geopolitical stability. From this lens, the modern economy starts to make more sense. US/Euro governments won't rock the boat with billionaires since they are essentially financing the welfare state which kicks back enough taxes for the US military to keep the whole meta-structure stable.
This also explains low productivity and growth, particularly in the EU.
Back off the soapbox--if we rally, looking for the 4295 put to go below 25d and I'll add another one. If we drop enough, move to a longer time frame and lock more in at around 25d.
We just keep going up wtf, was definitely expecting a more sideways action. Powell must have went on vacation early and forgot to turn off the money printer.
Sold a 4290 put for 5.25 exp and 4320 put for 15.75 exp on the 9th, bought back the 4280 puts. If the 4320 put can go below 25d, I'm gonna buy back the 4295 and sell another 50d put about a week out. Just gotta keep riding that bollinger band until we take a break and go sideways. The market is basically playing ping pong between value/growth and when one gets tired, the other takes the lead. Thesis remains that we will not suffer more than a 5-10% dip until further notice.
Sold a 4290 put for 5.25 exp and 4320 put for 15.75 exp on the 9th, bought back the 4280 puts. If the 4320 put can go below 25d, I'm gonna buy back the 4295 and sell another 50d put about a week out. Just gotta keep riding that bollinger band until we take a break and go sideways. The market is basically playing ping pong between value/growth and when one gets tired, the other takes the lead. Thesis remains that we will not suffer more than a 5-10% dip until further notice.
During markets like this where we are grinding up, I like to keep between 1-3 units that has a tenor of <7 days (I learned the word tenor from Dest LOL). 1 unit is ~35% of my account in notional terms if the put were to expire itm. However each unit will have a different delta.
I typically sell 1 unit atm expiring 1-3 days and if it moves to 25d, I will sell another one about 7 days out then go from there.
When things get more volatile, it depends on how many units expire itm and I move out in time to sell covered calls and add more short puts with longer dated exp and lock in the vol. A lot of it just depends on where I think the market is going with a lot of cushion built in.
I typically sell 1 unit atm expiring 1-3 days and if it moves to 25d, I will sell another one about 7 days out then go from there.
When things get more volatile, it depends on how many units expire itm and I move out in time to sell covered calls and add more short puts with longer dated exp and lock in the vol. A lot of it just depends on where I think the market is going with a lot of cushion built in.
We should continue to grind higher and at worst tread water. No crash, no big correction. I will keep selling these 50d short term puts at these position sizes (1 unit = 35% of portfolio if assigned) and add when the previous one hits 25d. It's the lowest risk way to make 10-20% annually in a market like this.
