Friday, August 13, 2010

* UPDATE SPY - Shutting the Weekly Trade Down

SPY is trading $108.59, with IV30™ down 2.2%. The LIVEVOL™ Pro Summary is below.

Yesterday we looked at this trade: SPY trading weeklies.

Let's close this down; we got essentially exactly what we wanted; small down and front month goes away worthless. The Options Tab is included below:

Thursday Trade
Buy 1 SPY Monthly 110 put for $2.31
Sell 1 SPY Weekly 108 put at $0.47
Sell 1 SPY Weekly 106 put at $0.11
Total debit: $1.73

Close Today
Sell 1 SPY Aug (Monthly) 110 put @ $2.17
Let the rest expire worthless or if you have to, go head and pay $0.09 for the Aug 108 weekly.

If everything goes as planned and expires worthless, the return is $2.17 - $1.73 = $0.44 or 20% in one day. Buying back the weekly 108 put takes the return to $0.35 or 16% in one day.

By popular demand and reluctantly, I have created a trade journal of actual trades I have executed. This will update weekly starting from this week moving forward. You can see it below. Soon I'll just post a link to it on the side bar to the right.

Note the SPY trade I did was slightly different than the one posted. I hold no other positions in SPY right now.

This is trade analysis, not a recommendation. My trades are for me, not anyone else. Options trading is risky and requires a ton of regulatory permissions. This is strictly illustrative.

Legal Stuff:


  1. Thanks for the update on this position, good one day return. Also thanks for sharing some methods for trading these weeklies...good stuff.

  2. Your profit calculations are wrong, completely ignoring margin. 132% retrun on SPY is less than 8% return on margin, 18% retrun on GS is less than 2% return on margin

  3. If margin is that expensive for you then buy 1 $0.01 put to cover the 1x2. Or buy a $0.05 option. Be creative.