03-26-2020, 02:00 PM
(03-26-2020, 12:50 PM)fenders53 Wrote: Sold my first SPY put. A JAN21 230 Strike, and a SEP20 225 Strike. That's enough until I feel more comfortable with how they move. I can adjust on the fly when the inevitable big down day comes.
I'd really appreciate some feedback but you'll have to accept my rationale for what I did to offer advice.
I believe it is highly probably the market pulls back 10-15% in the next few weeks. I think there is no end to what the FED will do to block a decline much more than that. I have no intention of holding these puts more than about a month and only if the virus is getting exponentially worse. I am not holding these puts with any confidence the market pulls back a total of 50% plus. The market will soon enough get numb to catastrophic news like it does every correction. A good fund manager knows there were some generational good deals onceretain stocks last week. I could be wrong but we all have to have to have a thesis. I'm OK with losing half my money for the benefit of the insurance. Nowhere near enough to fully protect my port but it won't hurt my mood on a big down day. This is just a bit of a hedge as I am very much long other than a few covered calls I sell each week. I don't intend to make a big short bet against the market. I am a month late doing that. It's just outside my little box lol. If I felt comfortable doing that I'd just just sell all my stocks and I'm not going to do that either.
You sold or bought to open? I assume you bought to open to initiate a bearish option position?
If that's the case, I think volatility will be in your favor at least once in the next several days, which is how I would play those. Wait for the first big drop day and close 'em out while implied volatility is your friend (my strategy with the UAL and recent SPY Put option purchases). As you well know, put option premiums today are sky high compared to a month ago. So, you just have to hope you got in somewhere near the apex of an upswing, and can take advantage of implied volatility on a day when it shoots down below levels where you purchased. Gambling, basically.
