NaughtyPines

Opened (IRA): SPY December 16th 325 Short Put

Long
AMEX:SPY   SPDR S&P 500 ETF TRUST
... for a 3.41 credit.

Comments: (Late Post). Part of a longer-dated strategy to emulate dollar cost averaging into the broad market, targeting the <16 delta strike paying around 1% of the strike price in credit. This is also an effort to stay more maximally deployed while I wait for shorter duration to be more productive from a premium-selling standpoint.

Your basic choices are to (a) wait for a more productive IV environment in shorter duration; (b) force in strikes in shorter duration to get paid; or (c) sell longer duration. I'm kind of opting for (c) while I wait for (a) here.* However, I'm perfectly fine with those who want to do (b), keeping in mind that it's likely that they'll have a few more trade management headaches along the way, since those "forced in" strikes will be closer to at-the-money than what I'm doing here so are statistically more likely to be tested.

Generally, I'll roll from month to month at 50% max, looking to deploy in shorter duration should we get weakness and an uptick in implied volatility .

Currently, here are the shortest durations in which the <16 delta strike is paying around 1% in broad market:

QQQ: September 23rd (49 DTE ), 285 strike, 14 delta, paying 2.96.
XLK**: AH showing wide bid/ask.
IWM: September 23rd (49 DTE ), 171 strike, 15 delta, paying 1.76.
SPY: October 21st (77 DTE ), 362 strike, 13 delta, paying 3.75.
EFA: October 21st (77 DTE ), 58 strike, 15 delta, paying .62.
DIA: December 16th (177 DTE ), 275 strike, 11 delta, paying 3.05.**

* -- December would not be my first choice of expiries out of the box. However, I already have rungs on in September (376), October (362), and November (340).
** -- XLK (Select Sector SPDR Trust Technology) is "QQQ lite" and enjoys a close correlation with the broad market ( 3-month SPY correlation of .97), so have included it here. Additionally, its 30-day IV is comparable to the QQQ's at 26.5% versus QQQ's 26.7% with the added advantage of being a little bit less buying power heavy than either the QQQ's (321.75/share) or IWM (190.80/share).
*** -- The October <16 delta isn't paying, and there is no November yet.
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