Posted by elementsix on 2nd of Dec 2021 at 11:44 am
SPY Hedging - With options being so expensive you are better off
SELLING calls against your long equity position (covered call). In
theory it is not complicated, but in practice it can be frustrating
if your position keeps getting called away as the stock jumps.
I regularly sell SPY covered calls; need to time well w/ cycles
to be consistently successful. Once correction has started premiums
drop and I dont find it worth time/risk for desired strike.
Your selling Vol w/ big tail risk if you have to cover during
unexpected runs/rebound. One bad trade wipes out many small
gains.
@pep8261 - can you give example of put spread you mention?
Thx.
yep - I know one fund that sells the covered calls against their
SPX position, then uses the premiums generated from selling the
calls to buy some put protection
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SPY Hedging - With options
SPY reversion to mean systems and option protection strategies
Posted by elementsix on 2nd of Dec 2021 at 11:44 am
SPY Hedging - With options being so expensive you are better off SELLING calls against your long equity position (covered call). In theory it is not complicated, but in practice it can be frustrating if your position keeps getting called away as the stock jumps.
I regularly sell SPY covered
Posted by mitchell on 2nd of Dec 2021 at 12:11 pm
I regularly sell SPY covered calls; need to time well w/ cycles to be consistently successful. Once correction has started premiums drop and I dont find it worth time/risk for desired strike. Your selling Vol w/ big tail risk if you have to cover during unexpected runs/rebound. One bad trade wipes out many small gains.
@pep8261 - can you give example of put spread you mention? Thx.
yep - I know one
Posted by matt on 2nd of Dec 2021 at 11:46 am
yep - I know one fund that sells the covered calls against their SPX position, then uses the premiums generated from selling the calls to buy some put protection