These short calls are both parts of poor man's covered calls (PWCC's) in VXX, the long-dated long calls of which are in the September expiry ... .
The June 17th 18 call had lost over 65% of its value, so I opted to roll it here to the July 8th 15.5 short call (as close to the 75% probability out-of-the-money strike as I could get) for an additional $68/contact in...
This is part of a poor man's covered call setup in VXX, the back month of which is a September VXX 12 long call.
I'm being somewhat mechanical here in rolling the 17.5 short call to the July 1st 75% probability out-of-the-money short call. I say "somewhat mechanical" because the usual thing to do is to wait until the short call is near expiration and then roll...
Adding to my "suite" of long VIX/VIX derivative setups, since there isn't much premium to sell in this market right now until we get into the "fat" of meaty earnings next week (NFLX, etc.).
Filled for a $418/contract debit. I'll look to take these off at 25% max profit ... .
Layering on another long volatility setup here on this dip below 17.50 in VXX. (See Post below as to how to work this "poor man's covered call").
Unfortunately, there are virtually no metrics to provide with a diagonal, such as probability of profit, since it will vary depending on how much credit you collect during the life of the setup, when and how much VXX...
With VIX at sub-14 levels and without much on the earnings calendar that is ideally playable with options from a premium selling standpoint, next week is likely to be a schnooze in the absence of a broad market volatility pop.
Nevertheless, there are a couple of plays I might consider.
MON: MON announces earnings on April 6th before market open. With an implied...
I'm rolling the May 6th 21 short call of this setup to the May 20th 21 short call for an additional $23 credit, as the May 6th had lost a good deal of its value ... .
The long-dated option leg of the setup cost a $752 debit when I put it on, and I've collected a net of $229 in credits so far -- about 30% the value of the long option.
Naturally, as price moves...
Cycling into some more long volatility product here with this VXX diagonal, which I filled for a $3.73 debit ... .
See the post below as to how to work this setup.
With this upmove here, I'm getting out of this long-term play while I can for basically scratch.
Here's my critique on this methodology ... .
Pro's: (1) The strategy is great as a long-term play for a core position (for example, in an index ETF like SPY or in TLT), particularly if you value simplicity and don't want to be legging into and out of spreads or iron...
Rolled my VXX May 20th 21 short call down to the 20 short (same expiry) for an additional .27 ($27 credit).
This is part of my VXX synthetic/poor man's covered call ... .
Rolling the short strike down 2 strikes from the 109 for an additional 1.00 credit. With the amount of credit collected so far, I just need to let theta decay work its magic on the short option going into the expiration of the long-dated option in September.
Synthetic covered calls using options are a good way to utilize capital efficiently as compared to buying the underlying outright and initiating, for example, a covered call. Were you to buy 100 shares of VXX at $14, it would cost $1400, with the current value of the short call reducing that cost basis by about $160, so it would cost around $1240 to put on, as...
Taking a little advantage of this down move to roll my IWM Poor Man's Covered Call April 104 short call to the May 105 for a .33 credit.
It isn't much, but it's a credit ... .
This is a continuation of the post, below, which was getting a bit "long in the tooth."
To make a long story short, I put on this setup at the end of December, originally as an Aug 19th 97 Long Call/Feb 15th 115 short call. Since that time, I've been rolling the short call up and out, out and sideways, out and down, or down within the same expiry, racking up...
I previously described this setup in the post below. I would ordinarily do it in SPY, but I have SPY iron condor setups on and IWM is a good instrument to play with this strategy, since it is the index ETF with the smallest value among SPY, IWM, QQQ, and DIA.
Here's the setup:
Aug 19th 97 long call
Feb 19th 115 short call
Entire Package: 16.83 debit...
As I'm waiting to dry some powder out between earnings seasons, I'm boning up on options setup fundamentals (doesn't hurt to go over them now and again), new potential trading setup ideas and the like ... .
I like this one where I just don't feel like tying up the buying power on an ordinary covered call ... . It's basically an uber long diagonal: ...
