Realized I done goofed again since I was supposed to write the 14d puts, not the 5d last week, but it's not a huge deal, left a few hundred on the table. Just wrote the 4375 put for 11.25 expiring Monday as the short call is on track to be assigned. Gain of $5395 for July so far. Let's see if we can hit 7500.
Selling Premium on ES
- Thread starter tnatrader
- Start date
can you do covered call instead? never try to write the market unless you own the underlying, lessons learned.
No they are not. In any case if the cash is in hand, I’d rather scalp $50/pt rather collecting premium, premium is not that great given how expensive the index is.
They're the same in that you can structure any covered call as a short put and vice versa. It's one of the principles of put/call parity.
Would like vol to be higher for sure, but it's in line with the long term average. My goal is to make 10-20% a year with this portfolio, which I'm accomplishing with lower risk vs a diversified passive portfolio.
Would like vol to be higher for sure, but it's in line with the long term average. My goal is to make 10-20% a year with this portfolio, which I'm accomplishing with lower risk vs a diversified passive portfolio.
Sold the 4400 puts late in the day for 16.5 exp Fri when the 4395 lost most of its delta. ES had a reversal right before close which put the 4395s itm so I sold the 4395 call for 14.25 also exp Friday. Current thesis remains the same: I don't see much of a downturn, let's see what happens on Friday.
I wonder if zirp has taught risk asset investors to behave in a more binary fashion. In the past, when (let's say) risk free rates were at 5%, when investors felt that there would be a 10% risk off correction, they would pull money in advance of that and put it in a savings account, essentially causing your usual 5-15% corrections. The opportunity cost of missing out if the correction failed to materialize was ameliorated by the 5% so investors were willing to make that trade. Now that rates have been zero for a while, investors now realize, even if there is a 10-20% correction, there's really no point pulling money out since rfr is now negative. So even if there "should" be a normal bull market correction, they don't happen or they get bought back faster since the opportunity cost of missing out is that much greater. These violent V shaped correction/recovery episodes make a lot more sense in this context as investors now only pull back when there's a long term risk of capital loss, which exacerbates losses, but also quickens recoveries when those fears do not manifest in reality. Maybe market participants didn't understand this the first few years of zirp since it was unprecedented, but now that everybody has figured it out, this explains why the markets react this way. If I'm right, this type of all or nothing markets won't change until Fed changes its policy, which I don't think will until inflation or social unrest forces them to.
Conspiracy Theory (don't cancel me bro): Fed policy stokes inequality and billionaires are trying like mad to distract America with cultural issues. Is it a coincidence that race relations deteriorated in ~2012-2013 according to Gallup when Occupy Wall St started in Sep 2011?
I wonder if zirp has taught risk asset investors to behave in a more binary fashion. In the past, when (let's say) risk free rates were at 5%, when investors felt that there would be a 10% risk off correction, they would pull money in advance of that and put it in a savings account, essentially causing your usual 5-15% corrections. The opportunity cost of missing out if the correction failed to materialize was ameliorated by the 5% so investors were willing to make that trade. Now that rates have been zero for a while, investors now realize, even if there is a 10-20% correction, there's really no point pulling money out since rfr is now negative. So even if there "should" be a normal bull market correction, they don't happen or they get bought back faster since the opportunity cost of missing out is that much greater. These violent V shaped correction/recovery episodes make a lot more sense in this context as investors now only pull back when there's a long term risk of capital loss, which exacerbates losses, but also quickens recoveries when those fears do not manifest in reality. Maybe market participants didn't understand this the first few years of zirp since it was unprecedented, but now that everybody has figured it out, this explains why the markets react this way. If I'm right, this type of all or nothing markets won't change until Fed changes its policy, which I don't think will until inflation or social unrest forces them to.
Conspiracy Theory (don't cancel me bro): Fed policy stokes inequality and billionaires are trying like mad to distract America with cultural issues. Is it a coincidence that race relations deteriorated in ~2012-2013 according to Gallup when Occupy Wall St started in Sep 2011?
ES fixing price was under 4395 so I got 2 lots of ES. B/E for them was at 4375 so I sold 2 atm calls at cash close exp Mon for 13 apiece, but in this kind of scenario in the future, I will sell 1 atm and the other at around 25d.
Still short the 4420 put exp Mon. If we close below 4390, will have 3 contracts with a b/e of 4380. Let's see what happens, but I don't think there's a big drop in the cards.
Official numbers for Jul is a gain of $7920.
Still short the 4420 put exp Mon. If we close below 4390, will have 3 contracts with a b/e of 4380. Let's see what happens, but I don't think there's a big drop in the cards.
Official numbers for Jul is a gain of $7920.
ES Closed around 4385. B/E was at 4375 and I sold 3 4390 covered calls exp Sep 17 since I got 3 ES after assignment. Got 87 per and new b/e is 4290. If we get a nice rally and the delta on these calls get above 75, I'll start writing more puts. There's enough notional exposure here that I'm comfortable with. If I were at home, I may have written laddered calls, 1 at 50d, 1 at 25d, 1 at 12d, instead of all 3 at 50d, but I was sitting in a car with shitty signal and had to keep it simple. Not a huge deal either way. It's a 13k gain in 45 days if we stay at these levels so I'll take it.
On vacation with spotty wifi so no update till now. Closed the short calls when they hit about 75 delta and 2 of the 3 ES contracts this Wednesday. Sold a 4495 call expiring today and sold another 4500 put today near middle of the day. The covered call got assigned and now am back to a short 4500 put expiring Monday. All told, about a 10k gain in Aug.
Not including today's action, but who knows when I will have wifi again. It's a minor miracle I have been able to put orders in at all.
a is a benchmark of equally weighted iShares Core Allocation Funds.
Not including today's action, but who knows when I will have wifi again. It's a minor miracle I have been able to put orders in at all.
a is a benchmark of equally weighted iShares Core Allocation Funds.
Almost missed the chance to sell some calls against my assigned puts on Friday since my flight landed right around market close. Not surprised to see how September is unfolding, but don't think we will have anything more severe than a 10% correction. Still holding 1 ES and sold the 4520 calls expiring next Friday for 7.25. Made it a short strangle by selling the 4325 puts for 12.25.
Let's see how much of a downturn we can muster for next week. If put gets assigned, we are looking at 80% notional exposure.
Let's see how much of a downturn we can muster for next week. If put gets assigned, we are looking at 80% notional exposure.