NaughtyPines

WEEK OF 9/28: NON-EARNINGS PLAYS FOR PREMIUM SELLING OPPS

AMEX:XLV   SELECT SECTOR SPDR TRUST HEALTHCARE
Although we are starting back into another earnings season, I'm just not all that fond of earnings plays; I prefer the relative boredom of index ETF trades or things like sector SPDR's for the generation of steady income as opposed to flash-in-the-plan earnings plays which are generally binary in nature. They either work out quickly and dirtily or go horribly awry such that you have to devote buying power to managing a tested side post-earnings, potentially for several options cycles going forward.

Since I have a play already going in OIH (current IVR at 66), I'm looking to add either index ETF trades this coming week or, in the alternative, sector ETF trades that are not correlated to what I've already got on in my portfolio and that have sufficiently high IVR so that a premium selling play is attractive.

Looking at the Dough Grid with the drop-down menu set to "TastyTrade", XLV is a possible candidate, with an IVR currently at 62 ... .

POSSIBLE TRADE:

Nov 20th 59/61/72/74 Iron Condor
POP % -- 61%
Max Profit: .61 credit/contract
Buying Power Effect: 1.39/contract
Break-Evens: 60.39/72.61
Delta: -2.36/contract

Notes: The short put side of the setup is placed around the 1 SD ; the long side, at the edge of the expected move to the topside for that expiration. Due to the price of the underlying, the spread of the wings is reduced to 2 strikes, although you can certainly expand the width to 3 strikes in order to harvest more credit from the trade. I wouldn't go wider than 3, however. Look to take off the entire setup at 50% max duration.

In all likelihood, the strikes may require a bit of adjustment at NY York open to accommodate overnight, broader index price movement.


I eventually went with a Nov 20 57/60/71/74 Iron Condor and got filled for a .90 credit, which is nearly 1/3rd the width of the wings (3 wide) ... .
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