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Shortput

KRE June 16th 35/April 21st 55 Long Call Diagonal IdeaDo you ... fade this move? Pictured here is a long call diagonal with the long leg out in June at the +90 delta, and the short leg out in April at the -30 to synthetically emulate the net delta of a covered call position (i.e., long stock/short call) where the short call of the covered call setup would be at the -40 delta strike. Metrics: Assumption: Neutral* to Bullish Buying Power Effect: 15.09 debit Break Even: 50.09 relative to 50.69 Spot Max Profit: 4.91 ($491) ROC%-Age as a Function of Buying Power Effect: 32.5% at max; 16.3% at 50% max; 8.1% at 25% max. Alternative Setups: April 21st 54 Covered Call. (Buy a one lot at 50.69, simultaneously sell the April 21st 54) Metrics: Assumption: Neutral to Bullish Buying Power Effect: 48.09 debit (cash secured); 23.33 (on margin) Break Even: 48.08 relative to 50.69 Spot Max Profit: 5.91 ($591) ROC %-Age as a Function of Buying Power Effect: 12.3% at max (cash secured); 25.3% at max (on margin). April 21st 46 Short Put (25 Delta) Assumption: Neutral to Bullish Buying Power Effect: 5.46 ($546) (On Margin); 44.33 (Cash Secured) Break Even: 44.33 relative to 50.69 Spot Max Profit: 1.67 ($167) ROC %-Age as a Function of Buying Power Effect: 30.5% (on margin); 3.8% (cash secured) As you can see by looking over the metrics, there are various advantages to each setup. With the long call diagonal, the ROC %-age stands out as its positive attribute, but the break even is basically at or near where the underlying is currently trading. With the covered call, the buying power effect relative to the long call diagonal is a bummer, but you start out with a break even below where the underlying is currently trading. The max profit potential of the covered call relative to that of the long call diagonal is comparable, but the ROC %-age in the covered call is lower due to the higher buying power effect, particularly in a cash secured environment like an IRA, where the long call diagonal would be far more buying power efficient. There may, however, be some small advantage to being in the stock: KRE pays a dividend, but it's only quarterly, so it would conceivably pay a distribution in March (the next distribution) and June. The last distribution was .4058 (i.e., $40.58 per one lot), so we're not talking hugely motivating money here. With the short put, your break even is more than $6 below where the underlying is currently trading, but the max profit potential isn't great relative to those of the covered call or long call diagonal. That being said, the ROC %-age at max is comparable to that of the long call diagonal. * -- I classify covered calls and "synthetic covered calls" like long call diagonals as "neutral to bullish" assumption setups due to the ability to reduce cost basis over time via roll of the short call aspect so that you could conceivably make money if the underlying moves sideways.
AMEX:KRELong
by NaughtyPines
Opening (Margin): /MES February 28th 4080 Short Put... for a 73.75 credit. Comments: Functionally rolling to a 4080 short straddle here to delta balance and bring my delta/theta ratio to back under 1.0. The position remains net delta short, which I'm fine with since we're at 30 day highs here. Will look to take off the whole kit and caboodle in the next several days here, since I've only got 32 DTE to go in this contract, and would like to move on to the March fairly soon.
CME_MINI:MES1!Long
by NaughtyPines
Assignment (Margin): NVDA 160 Short PutComments: Total credits collected/realized gain of 11.56 ($1156), with the difference between 160 and current price (125.66) an unrealized loss. Will look to sell call against on Monday with a starting cost basis of 160.00/share, as well as potentially covered strangle (short put + stock + short call). Unlike my QQQ 300 covered call (See Post Below), this one is on margin, where being in stock becomes a buying power hog relative to being in an options contract, so the motivation may look to exit at the earliest possible juncture for a scratch, rather than hang out in it endlessly. That being said, both NVDA and AMD are kind of "premium seller faves," since 30-day IV is decent a lot of the time. I'll start out selling 160 calls against and then proceed to roll those mechanically at monthly opex so long as my cost basis remains above current price.
NASDAQ:NVDALong
by NaughtyPines
Opening (Margin): /MES February 28th 3890, 3925, 3940, 3960... short puts. Comments: Replacing the short puts I stripped off in profit to delta balance what is now the -27, -31, -33, and -36 delta calls. The remaining -42 delta short call at the 4080 is only partially hedged, so position net delta still leans short. Opened the February 28th 3890 for a 41.00 credit. Opened the February 28th 3925 for a 49.25 credit. Opened the February 28th 3940 for a 53.25 credit. Opened the February 28th 3960 for a 59.25 credit.
CME_MINI:MES1!Long
by NaughtyPines
Closed (Margin): /MES February 28th 3620, 3700, 3760, 3770 ... short puts. Comments: Filled the 3620 for a 18.00 credit; closed it here for a 10.25 debit. (18.00 - 10.25)/.2 = $38.75 profit. Filled the 3700 for a 22.00 credit; closed it for a 15.25 debit. (22.00 - 15.25)/.2 = $33.75 profit. Filled the 3760 for a 31.25 credit; closed it for a 20.75 debit. (31.25 - 20.75)/.2 = $52.50 profit. Filled the 3770 for a 28.25 credit; closed it for a 22.00 debit. (28.25 - 22.00)/.2 = $31.25 profit. Will re-erect short puts to delta balance ... .
CME_MINI:MES1!
by NaughtyPines