Friday, August 13, 2010

* UPDATE SPY - Shutting the Weekly Trade Down

SPY is trading $108.59, with IV30™ down 2.2%. The LIVEVOL™ Pro Summary is below.



Yesterday we looked at this trade: SPY trading weeklies.

Let's close this down; we got essentially exactly what we wanted; small down and front month goes away worthless. The Options Tab is included below:



Thursday Trade
Buy 1 SPY Monthly 110 put for $2.31
Sell 1 SPY Weekly 108 put at $0.47
Sell 1 SPY Weekly 106 put at $0.11
Total debit: $1.73

Close Today
Sell 1 SPY Aug (Monthly) 110 put @ $2.17
Let the rest expire worthless or if you have to, go head and pay $0.09 for the Aug 108 weekly.

If everything goes as planned and expires worthless, the return is $2.17 - $1.73 = $0.44 or 20% in one day. Buying back the weekly 108 put takes the return to $0.35 or 16% in one day.

By popular demand and reluctantly, I have created a trade journal of actual trades I have executed. This will update weekly starting from this week moving forward. You can see it below. Soon I'll just post a link to it on the side bar to the right.



Note the SPY trade I did was slightly different than the one posted. I hold no other positions in SPY right now.

This is trade analysis, not a recommendation. My trades are for me, not anyone else. Options trading is risky and requires a ton of regulatory permissions. This is strictly illustrative.

Legal Stuff:
http://www.livevolpro.com/help/disclaimer_legal.html

4 comments:

  1. Thanks for the update on this position, good one day return. Also thanks for sharing some methods for trading these weeklies...good stuff.

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  2. Ugh... regulatory permissions...

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  3. Your profit calculations are wrong, completely ignoring margin. 132% retrun on SPY is less than 8% return on margin, 18% retrun on GS is less than 2% return on margin

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  4. If margin is that expensive for you then buy 1 $0.01 put to cover the 1x2. Or buy a $0.05 option. Be creative.

    ReplyDelete