Just an observation, the Nov 87 Put is selling for about a $1.
Even the $80 put is selling for about 0.60 - 0.70 cents.
Hard to imagine SPY going below 88 by OPEX in Nov, you get to
keep the put money and only get the stock 'PUT' to you if SPY goes
below that price. Of course anything could happen, just
pointing it out
selling those 87 SPY puts for a buck to generate some income is
working well. I mean the risked seemed so low, SPY hasn't
traded at $87 since July 2009, so even if the market had had
another leg down vs the current bounce we are enjoying, the SPX
would have had to sell off to about 925 in order to bring the SPY
down to 87, which I thought was highly unlikely in the time frame.
I think the margin requirement is about $5,000 to sell the
puts. If the stock is put to you then you would need
$44,000. Also if it is a non-margin account like a 401K or
IRA then you would need the entire $44K there in cash to even sell
the put but for a cash margin account I don't think its so bad.
Nope I don't think that makes economic sense. And besides matt
was talking about SPY options which I thought all the ETFs settled
in cash.
In any case, almost no one exercises an option; it is almost
always more profitable to sell into the market due to the extra
time value and/or speculative value regardless how small. And in
the case of all 'out of the money' options, that is all there is:
time and spec value.
$5K to make $525, actually. The 5K was based on selling 5
contracts trading at $1.05 (obviously subtract commissions).
I used 5 contracts because I thought Matt used that as an example
but looking back I guess it was a senior moment. I did 5 in
one of my accounts.
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Nov SPY Puts
Posted by matt on 22nd of Sep 2011 at 01:19 pm
Just an observation, the Nov 87 Put is selling for about a $1. Even the $80 put is selling for about 0.60 - 0.70 cents. Hard to imagine SPY going below 88 by OPEX in Nov, you get to keep the put money and only get the stock 'PUT' to you if SPY goes below that price. Of course anything could happen, just pointing it out
Wow! ~ Great post :-) Thanks
Posted by cubby on 6th of Oct 2011 at 10:54 pm
I know this is late, but that's right awesome! ~ Thanks Matt!
selling those 87 SPY puts
Posted by matt on 6th of Oct 2011 at 02:48 pm
selling those 87 SPY puts for a buck to generate some income is working well. I mean the risked seemed so low, SPY hasn't traded at $87 since July 2009, so even if the market had had another leg down vs the current bounce we are enjoying, the SPX would have had to sell off to about 925 in order to bring the SPY down to 87, which I thought was highly unlikely in the time frame.
Matt, although I didn't take
Posted by frtaylor on 6th of Oct 2011 at 03:08 pm
Matt, although I didn't take this trade, I appreciate your posting it. It was educational for me. Would love to see any similar ideas in the future.
Yes, these are option strategies
Posted by cw12 on 6th of Oct 2011 at 03:03 pm
Yes, these are option strategies I do all the time. Don't want to say easy money, but easier money. When you write options, time decay is your friend.
Margin to write those puts....
Posted by perthx on 22nd of Sep 2011 at 11:55 pm
Margin required to write those puts would keep most from doing it, which is why the margin is so great...they don't want everyone writing them.
I think the margin requirement
Posted by tom on 23rd of Sep 2011 at 06:39 am
I think the margin requirement is about $5,000 to sell the puts. If the stock is put to you then you would need $44,000. Also if it is a non-margin account like a 401K or IRA then you would need the entire $44K there in cash to even sell the put but for a cash margin account I don't think its so bad.
$5k margin to make $100
Posted by perthx on 23rd of Sep 2011 at 10:01 am
Nope I don't think that makes economic sense. And besides matt was talking about SPY options which I thought all the ETFs settled in cash.
In any case, almost no one exercises an option; it is almost always more profitable to sell into the market due to the extra time value and/or speculative value regardless how small. And in the case of all 'out of the money' options, that is all there is: time and spec value.
$5K to make $525, actually.
Posted by tom on 23rd of Sep 2011 at 10:40 am
$5K to make $525, actually. The 5K was based on selling 5 contracts trading at $1.05 (obviously subtract commissions). I used 5 contracts because I thought Matt used that as an example but looking back I guess it was a senior moment. I did 5 in one of my accounts.