Selling three cash secured puts in SLV with 59 D.T.E. for .22 each with the idea of possibly ending up with a 10 lot. I would like to have a covered strangle position in silver. I want to reduce basis to take the shares or be assigned, then write more puts on decent drops and always have some short calls against the shares. Implied volatility rank is only 27% but never gets that high for P.M. and I had to go out further in time to get the premium I felt decent. I like the call skew for commodities and the less correlated aspect to the stock market.
Comment:
Has not fallen enough for me to roll the puts I have written or add to the position. I did write a single put at 14.5 in a different account but am just staying patient and looking for the best opportunities as far as the options premium goes. If we can get down to around 14 would be just fine. I may look to find a way to incorporate gold into this trade at some point, but that notional is quite a bit bigger for me and not as easy to scale.
Trade active:
So I really screwed up today by rolling this position to October. I bought back the 15 puts for .51 and sold them again for .68 for a cost basis reduction of .17 per contract except one small detail I forgot about. Fidelity is 4.95 plus a .75 per contract fee which is really eating into this type of trade and I am so used to Tasty Works with their 1.30 per round trip.....I should have just taken the shares and wrote calls further out for better premium.
Comment:
I am loooong silver and have taken shares and sold calls and puts at so many levels I am going to have to wait for my account to settle out some to figure out where I am exactly. Based on the FIFO I may get a loss but unless we continue down more I will be good if we can hang around here until January.
Comment:
This position was not updated but this is where it stands.....Closed 3 lot of short 14 puts today for .26 (sold for .42 measly .16 gain) I did not want to get assigned more as the original 3 lot at the 15 strike have been assigned already. I did a "monied" 4 lot buy/write at 13.30 for .74 at the 13 strike which will be called away most likely next Friday for a total .44 gain and wrote calls at the 15 strike in January for .16 when initially assigned. What this all means in a nutshell is I have reduced basis by 3.41 overall (assuming we stay above 13 for this next week) but I am not very pleased with this product even though it is small enough to be good for an IRA or small account. The commissions and the lack of premium to roll are notable, as well as how poorly PMs tend to hedge in market downturns. Strong dollar and rising interest rates have a greater affect but I will still be long a 3 lot with a basis of 13.87 and short 15 calls in January to cover them. With this product it seems you must leave your positions until expiry.
Comment:
Most called away at this point and only a 3 lot left. Wrote the December 31 15 strike calls for 1.04 and will continue to use this product but with the view that all options will be held until expiry/assignment and you can not really use the 45 D.T.E. "sweet spot" of theta decay choice as there is just not enough premium in them. Basis is now 12.83 if not called away and still glad to hold up to 10 lots