NaughtyPines

THE WEEK AHEAD FOR PREMIUM SELLERS: BE PICKY, STAY PICKY

INDEX:VIX   CBOE Volatility Index
With May opex under our belts, how's the coming week looking for premium sellers? Well, not so hot ... .

VIX/VIX derivatives: VIX             is well off it's April 20th 12.50 low, having popped to 17.50 pre-opex, a chunk of which it gave up on Friday, dropping to 15.20. My general rule of thumb is VIX>15, put on index premium selling plays; <15, well, look for something else. VIX             15.20 isn't horrid for index premium selling, (See SPX             Classic 85/75 Iron Condor Post, below), but naturally higher is always better.

Additionally, I'm not keen to go "long volatility" here in either VIX             or a VIX             derivative like VXX             or UVXY             , since I use VIX             to guide my entries in VXX             and UVXY             , and I'd really like to see another VIX             13 first before piling into more long VIX/VIX derivative plays.

"Something Elses": Unfortunately, there isn't much for "something else" to play in terms of selling premium under 45 DTE             . Underlyings with fairly liquid options are basically sub-70th percentile implied volatility across the board, although GDX             still remains in fairly high implied volatility territory (I've got some GDX             short strangles on, so that play is kind of off the board for me here). Earnings season is basically all but over, although there are a few stragglers that might be worth playing. (See BBY             Post, below).

Naturally, for things like index plays, you can look farther out in time for higher implied volatility percentages (90 DTE+) when VIX             <15, but my boat is fairly loaded here, so I don't think I'm going to be doing that in the short term unless near term setups come off in profit, freeing up oodles of buying power that is sitting there unused.

Well, What About "Clean Up", Then? ... : I am always keenly aware of setups I have on that either are or could quickly become turd piles (they're either broken or close to being so); I've always got a few of those on, because it's the nature of the beast. As part of my daily routine, I always focus on whether it would be beneficial to roll some of these out for strike improvement, even though they've largely got plenty of time to work out. Sometimes, after all, you get intratrade price movement that makes a roll "in the middle of things" (i.e., 25 DTE             or more) beneficial as opposed to waiting and seeing how things play out more toward expiration.

Otherwise, Handsit: I'm picky, and I intend to stay picky. For individual underlying plays, I'm looking for stuff whose implied volatility percentile is >70% over the past 52 weeks and whose implied volatility is >50% 45 DTE             ; for index plays, I'm looking for VIX             >15 (and preferably higher). These are the plays that will yield the largest premium for a premium seller ... . Moreover, it's not as though I'm particularly desperate here to have trades on with everything that's in queue at the moment.
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