Opened (IRA): SMH May 17th 198 Monied Covered Call
... for a 192.24 debit.
Comments: Opened this in late Friday's session as it floated to the top of my IV screener with IVR/IV at 106/39.
Sold the -75 delta call against 100 delta of long stock, with a resulting cost basis of 192.24/share. This is to emulate a 25 delta short put and to take advantage of call side IV skew while having "built-in" position defense via the short call. Will look to add at intervals, assuming IVR/IV remains high, generally taking profit at 50% max and defending via roll out of the short call.
Metrics:
BPE/Break Even/Cost Basis in Shares: 192.24
Max Profit: 5.76 ($576)
ROC at Max: 3.00%
ROC at 50% Max: 1.50%
Variants:
Short Put:
May 19th 200 Short Put, 4.65 at the mid, 195.35 (cash secured), 25.70 (on margin). 2.38% ROC at max, 1.19% at 50% max for cash secured; 18.09% ROC at max, 9.05% at 50% max on margin (which is why you stick with the short put on margin; it's more BP efficient).
Synthetic Short Put:
May 19th 110/200 Short Put Vertical, 4.50 at the mid, 85.50 (cash secured), paying .15 to bring in BPE by more than half, 5.26 ROC at max, 2.63% at 50% max.
This would only make sense in a cash secured environment from a BP efficiency standpoint; the naked short put remains more BP efficient on margin than either the covered call or the "synthetic naked short put" spread.
Standard Short Put Vertical:
May 19th 190/200 Short Put Vertical, 2.03 at the mid on BPE of 7.97 (both cash secured and on margin), 25.57% ROC at Max; 12.74% ROC at 50% max.
Comments: Opened this in late Friday's session as it floated to the top of my IV screener with IVR/IV at 106/39.
Sold the -75 delta call against 100 delta of long stock, with a resulting cost basis of 192.24/share. This is to emulate a 25 delta short put and to take advantage of call side IV skew while having "built-in" position defense via the short call. Will look to add at intervals, assuming IVR/IV remains high, generally taking profit at 50% max and defending via roll out of the short call.
Metrics:
BPE/Break Even/Cost Basis in Shares: 192.24
Max Profit: 5.76 ($576)
ROC at Max: 3.00%
ROC at 50% Max: 1.50%
Variants:
Short Put:
May 19th 200 Short Put, 4.65 at the mid, 195.35 (cash secured), 25.70 (on margin). 2.38% ROC at max, 1.19% at 50% max for cash secured; 18.09% ROC at max, 9.05% at 50% max on margin (which is why you stick with the short put on margin; it's more BP efficient).
Synthetic Short Put:
May 19th 110/200 Short Put Vertical, 4.50 at the mid, 85.50 (cash secured), paying .15 to bring in BPE by more than half, 5.26 ROC at max, 2.63% at 50% max.
This would only make sense in a cash secured environment from a BP efficiency standpoint; the naked short put remains more BP efficient on margin than either the covered call or the "synthetic naked short put" spread.
Standard Short Put Vertical:
May 19th 190/200 Short Put Vertical, 2.03 at the mid on BPE of 7.97 (both cash secured and on margin), 25.57% ROC at Max; 12.74% ROC at 50% max.
Trade closed manually:
Closing for 195.00, .12 short of 50% max. 2.76 ($276) profit.