Most IRAs will allow buying puts (assuming you get the appropriate approvals), even if you don’t own the underlying in the account. This opens up the field for speculative uses of options, in addition to the buttoned-down protective put strategies. Recently I had deep in the money puts and OTM covered calls on SPY in my IRA account. As expiration approached I …
Labor day is only a few weeks away, and it is looking like the summers of 2004 and 2010 will both end up flat for SPY. Three observations: Last week’s move above 113 was interesting, it was close to bouncing off the 2004 top trendline, perhaps we will finally see some sort of recognizable pattern to the market tops in 2010. Squinting at the …
The biggest downside of covered calls is their lack of downside protection on the underlying. A big, but not unusually big correction can wipe out many months worth of profits. One strategy for reducing this exposure is to buy puts, but when I have looked into this strategy in the past the puts were either so expensive they ate up all the profits, …
Made my first trade in XXV yesterday, buying at 23.07. During corrections, like the one we are in right now, the VIX index tends to spike up pretty early, a day or two in. Later, even when the market drops are larger, the VIX does not seem to match the earlier highs–unless of course the market moves into a more panicky phase.
Update Well, I was clearly wrong about people not being in panicky mood. Around 10:30 EST the market decided to take another leg down and the VIX did spike up quite a bit. Later in the day the market rallied back to around the point I created this position. I bailed out of my position less than an hour after I created it, …
