Selling Premium example

    Posted by matt on 3rd of Apr 2018 at 11:08 am

    One thing I like to do is sell premium on short term weekly SPY calls and puts.  It takes a lot of money to make money at this, but it's something that I like doing and with weekly options, they expire on Mon, Wed, and Friday.  

    For example this morning  SPY was trading at 258.7, and at the same time SPY Put options that expire tomorrow were still going for every high premium.  SPY 247 Put options were selling for 8 cents, while that isn't a lot of money, I sold 1000 of them, so if they expire worthless that's $8000.  That strike price is now 12.5 points away.  That means that the SP& 500 would have to roughly sell off 125 point between now and tomorrow's close for those to be at the money, possible, but very very low odds.  It's all about the odds. I go out as far as I can with typically only a day or so to hold.  And I like doing them on the same day as expiry when I can because then you literally have just that day

    Other's I may still look at are SPY 250 puts which are trading for 10 cents now, that's basically 95 SPX points away, I may sell some of those, as I don't see the SPX selling off 95 points from here to tomorrow's close

    good stuff - keep them

    Posted by roger on 4th of Apr 2018 at 11:59 am

    good stuff - keep them coming

    how much did that cost

    Posted by najor on 3rd of Apr 2018 at 07:46 pm

    how much did that cost to enter the position

    Another alternative that doesn't require

    Posted by toothdoc on 3rd of Apr 2018 at 11:38 am

    Another alternative that doesn't require  a large account is to sell bull put speads(rather than naked puts) on the SPX.  I sold 10  2525/2520 verticals  on 4/2 (expire 4/6) for $1.15 credit, below  what seemed to be a resonable support area. My risk on the trade is  $3850 to make $1150. I dont have the capital to make a play like Matt made.

    thx for posting, great example!

    Posted by matt on 3rd of Apr 2018 at 11:48 am

    thx for posting, great example!  Yes selling naked calls and puts requires a lot of capital, with spreads you don't need it

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