As previously discussed in my post below, there are several things you can do in a "locally" low volatility
environment, one of which is to sell premium farther out in time. If you look at SPY's implied volatility
in the June, July, and August monthlies, you'll see that there is a natural gravity
toward normalization or reversion of implied volatility
to a background level of around 20%, with June having an implied volatility
of 16.4%; July, 17.6%; and August, 18.6%. It gets more toward 20% in September (19%) and December (21%), but I don't want to go farther out than two cycles (a lot can happen in two options cycles, and I naturally want to keep buying power free in closer-in-time expirations to take advantage).
Here are the metrics for this setup:
Probability of Profit: 51%
Max Profit: $109/contract
Max Loss/Buying Power Effect: $191/contract
Notes: Additionally, I foresee pulling off several SPY
setups in profit in the next few days, as we are less than two weeks away from May opex where I've got a variety of setups on, and I don't want to get behind the curve with keeping a certain measure of positive theta on here. It ain't sexy, but bread and butter ain't sexy ... .