UPDATE: SPY (IRA) COVERED STRADDLE WITH OVERWRITES

Just updating the spaghetti-works that is my SPY IRA position. In a nutshell, a January 15th 262 covered straddle with short call diagonal overwrites. I also have a "few" short puts on (See, for example, Post Below), so this doesn't represent the entire position, but is set out primarily to show management of the short call diagonal overwrites.

The primary goal here is to exit the short call overwrites profitably, leaving me with the "primary" January 15th 262 covered straddle position (the short call aspect of which I'll attempt to improve over time). The primary reason I just continued rolling out the monied covered call "as is" was, well, I slept better at night, and if the March sell-off teaches us anything, it's that brutal downturns can materialize quickly and out of nowhere.

Trade active:

Rolling the September 327 to the October 328 for a 1.40 credit with the resulting setup: Jan 262P/Jan 262C/Oct 317C/Oct 319C/Oct 328C/Oct 332C.

Comment:

Rolled up the Jan 262P's to the 277P's (16 delta) for a 1.93/contract credit toward the close in this weakness. Contemplating just allowing the shares to be called away at 262 (which is where the January short calls are at), rather than working the short calls up over time, so am not extending duration/attempting call side strike improvement here with 127 days to go. The downside to letting the shares go at 262 is that I've missed the up move from that level to (currently) 333. The upside is that I've been selling puts around this position like a madman and caught a huge chunk of the up move off of Great Recession lows, which I really can't be unhappy with. Resulting setup: Jan 277P/Jan 262C/Oct 317C/Oct 319C/Oct 328C/Oct 332C.

Trade active:

With 10 days until expiry: Rolling the October 332C to the November 341 for a 1.12 credit; the October 16th 328C to the November 326C for 1.13; the October 319C to the November 325C for .93; and the October 317C to the November 322C for 1.22 with the resulting setup: Jan 277P/Jan 262C/November 322C/November 325C/November 326C/November 341C, plus, of course, shares.

Comment:

This is exactly the kind of environment the short diagonal aspect of this position is designed for: as a short delta hedge against an ordinarily bullish assumption/long delta portfolio made up of long delta short puts and long delta covered calls. It sucks to roll calls in a protracted up move, but this type of setup can save your bacon/smooth out your P&L in a down one ... .

Trade active:

Rolling the November 322C's to the December 324's for a .35 credit; the November 325C's to the December 327C's for a .47 credit; the November 326C's to the December 328's for a .38 credit; and the November 341's to the December 345C's for a .35 credit. Rolling the January 277P's up to the 317P's for a 2.80 credit. Resulting setup: January 317P'/January 262 C'/December 324C/December 327C/December 327C/December 345C.

Comment:

Correction: Should be Jan 317P/Jan 262C/Dec 324C/Dec 327C/Dec 328C/Dec 345C/Jan 465 (longs) + stock. :-)

Trade active:

Having taken off some long delta today in EWZ, XLE, etc., I need the short delta of the overwrites less, so selling some delta cutters here against each individual put ... .

Comment:

Selling the 325P against the 324C for 1.75; the 329P against the 327 for 2.07; the 330 against the 328 for 2.15; and the 350P against the 345 for 5.10. In essence, selling the respective short put strike for which I receive a credit that is greater than the inversion. I'll look at cleaning this up after I'm out of my SPY stock, since that accounts for the vast majority of long delta in my portfolio at the moment.

Trade closed manually:

Out of the covered call aspect for .18 short of max. :-). Also closing the short diagonals with their respective delta cutters here. Will look to potentially reestablish once I rebuild broad market long delta.