OPENING (IRA): SPX NOVEMBER 20TH 2935/2985 SHORT PUT VERTICAL
... for a 5.10 credit.
Notes: Putzing with a "10%-er." It's a 10%-er due to the fact that the credit received is 10% of the width of the spread. Here, I'm receiving 5.10 on a buying power effect of 44.90, which would be 11.36% ROC at max as a function of buying power effect (5.68% at 50% max) or 92.14% annualized at max, 46.07% at 50% max.
A comparable SPY naked short put would be at the November 20th 299 strike, paying 2.87 as of the writing of this post on a buying power effect of 296.13, which is nearly six times the buying power effect of the 50-wide SPX spread.
Because it's a spread and SPX is a cash-settled instrument, I won't be able to "wheel" this trade as I would a SPY short put (i.e., I won't be able to take assignment and then sell a call against), so I can either (a) sell short call vertical against to defend or (b) manage it at 50% max or take it off at a given loss metric, such as 2 x the credit received. I'll be doing the latter here.
The comparable SPY setup would be a 5 wide, paying at least .50 on a buying power effect of 4.50.
Notes: Putzing with a "10%-er." It's a 10%-er due to the fact that the credit received is 10% of the width of the spread. Here, I'm receiving 5.10 on a buying power effect of 44.90, which would be 11.36% ROC at max as a function of buying power effect (5.68% at 50% max) or 92.14% annualized at max, 46.07% at 50% max.
A comparable SPY naked short put would be at the November 20th 299 strike, paying 2.87 as of the writing of this post on a buying power effect of 296.13, which is nearly six times the buying power effect of the 50-wide SPX spread.
Because it's a spread and SPX is a cash-settled instrument, I won't be able to "wheel" this trade as I would a SPY short put (i.e., I won't be able to take assignment and then sell a call against), so I can either (a) sell short call vertical against to defend or (b) manage it at 50% max or take it off at a given loss metric, such as 2 x the credit received. I'll be doing the latter here.
The comparable SPY setup would be a 5 wide, paying at least .50 on a buying power effect of 4.50.
Trade closed: target reached:
Hit 50% max today. In for 5.10, out for 2.55 today, $255 profit in 6 days; 5% ROC, 304.2% annualized.
