Jonathan Hewitt
Active Member
Latest update on my August/September $215 put calendar: It is now worth even more at $4.80 per contract, or a 95.6% return. If you remember, I was concerned IV would drop and it did. It actually went up to ~63%, then ended lower than last week (was 58.6%, now 53.85%). If I am looking at it correctly, the reason it went up despite IV going down is that Theta Decay provided more value to the calendar than it lost from IV going down. Now that we are getting closer to the short option expiring it will be decaying a lot faster. My platform shows a Theta of $6.39/day for the spread.
If I was risk adverse I should have sold a long time ago. My prediction is IV will stay more or less in the same range until earnings and that I will continue to make money due to time decay. IV may go up and down due to the master plan coming out tonight and SCTY acquisition based news but I don't expect any huge changes. There will probably be a large IV drop after earnings so I currently plan to sell this calendar the day of earnings release.
While I haven't closed the trade yet I think I can say at this point that this is definitely worth trying again. For those who have been interested in this trade I will definitely try to set it up again just like I did this time, ~2 weeks before delivery numbers release. Hopefully IV falls enough after earnings to give us a good setup as it has in the past. If IV remains high after earnings due to the SCTY acquisition then it may not make sense to repeat the trade. I will be sure to monitor the situation and post here my findings.
If I was risk adverse I should have sold a long time ago. My prediction is IV will stay more or less in the same range until earnings and that I will continue to make money due to time decay. IV may go up and down due to the master plan coming out tonight and SCTY acquisition based news but I don't expect any huge changes. There will probably be a large IV drop after earnings so I currently plan to sell this calendar the day of earnings release.
While I haven't closed the trade yet I think I can say at this point that this is definitely worth trying again. For those who have been interested in this trade I will definitely try to set it up again just like I did this time, ~2 weeks before delivery numbers release. Hopefully IV falls enough after earnings to give us a good setup as it has in the past. If IV remains high after earnings due to the SCTY acquisition then it may not make sense to repeat the trade. I will be sure to monitor the situation and post here my findings.