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Opening (IRA): IWM December 23rd 156 Short Put... for a 1.67 credit. Comments: Targeting the <16 strike in the expiry nearest 45 days paying around 1% of the strike price in credit. This is more about not letting my IWM position get too short delta than about putting on an "ideal" premium selling trade. I still have an IWM short delta hedge on that is marking at around -60 delta (See Post Below) and had only one IWM short put rung on at the December 16th 164 (+23 delta at the moment), so the position was leaning more net delta short than I would like. This long delta additive trade will make my IWM position "net delta flatter."
AMEX:IWMLong
by NaughtyPines
Opened (Margin): AAPL Dec 16th 100/Nov 18th 136 LCD*... for a 23.23 debit. Comments: (Late Post). Did this fairly obvious bullish assumption play in AAPL on Friday weakness, buying the back expiry 90, and selling the front expiry at-the-money. 2.77 ($277) max profit; 11.9% ROC at max; 6.0% at 50% max. Cost basis of 23.23 with a 133.23 break even on a 26 wide. Max is realized on a finish above 136, with the profit zone being above the break even at 133.23. I don't have many cost basis reduction/rolling opportunities of the short call, so will money/take/run if given the opportunity. Currently, I'm shooting for 50% max/1.39 ($139) profit, so have entered a GTC order to take profit at 24.61. * -- Long call diagonal.
NASDAQ:AAPLLong
by NaughtyPines
2
TLT -- When I'm Going to Thinking About Going Long 20 Year+The short answer is: at pre-Great Recession levels when the yield on the 10-year T note was at 5.0% or above. Current forecasts for the terminal Fed funds rate are for 4.75-5.00 in February of 2023, which could push the 20 year+ paper exchange-traded fund back to near 2006-2007 levels between 80.50 and 82.05. (See, $TNX, June '06 high, 5.245, correspondent with a TLT 82.56 low; June '07 high, 5.316, correspondent with a TLT 82.20 low). If current bets as to the terminal rate are correct, we should fall short of the 2006 and 2007 levels, but could nevertheless be pretty darn close. And since current bets are that the Fed Funds rate doesn't come off 4.75-5.00 until much later in the year (the current forecast, is, ugh, November of 2023), this would conceivably require a good amount of time to work out. As we've seen, however, things can change. A few months ago, bets weren't being made on a terminal rate quite this high and that a potential cut would come far sooner in 2023. But, here we are. Inflation could either remain "sticky," or come down rapidly in response to what the Fed has done so far, in which case, we never see the low 80s in 20 year+ maturity paper. Naturally, if we do get there, I'll look to dip my toe in, whether it be with short puts (which would be a quasi-acquisitional play, most likely in my IRA) or something more directional, like a long call diagonal or a zebra/call ratio backspread ... .
NASDAQ:TLTLong
by NaughtyPines
Closed (IRA): IWM December 16th 145 Short Put... for a .76 debit. Comments: (Late Post). Collected a total of 2.11 in credits. (See Post Below). Out today for a .76 debit. 1.35 ($135) profit. This leaves me with two rungs -- the November 18th 163 (currently 14 delta) and the November 18th 173 (currently 33 delta), for a total of 44 long delta. Both of these are hedged off with a long put vertical in IWM (See Post Below), which is currently marking at -74 delta. I'll be rolling out the short leg of the diagonal tomorrow, which will decrease the short delta slightly, after which I will look to see whether I should add back in IWM long delta to make sure that I'm not too short/directional in this position. (33 long - 74 short = -41 delta). As part of this consideration, I also need to look at my portfolio delta as a whole to see whether it's okay to keep the IWM position net delta short, since it enjoys a close correlation with SPY (.95 3-month). Since it kind of drives me slightly bonkers to leave positions skewed out (regardless of whether they can do double duty as a closely correlated broad market hedge), I'll probably end up adding some long delta back in.
AMEX:IWM
by NaughtyPines