Still travelling for work, so looking for some "safer" positions since I can't be watching the stock all day.
What's the "not advice" on the following:
Iron Condor - I believe we have hit a new trading window for lateral movement, that's why I picked this
850/950 1450/1550
Pays about $7 in premium for close on 11/12
optionsprofitcalculator.com puts the odds on this at 95.6%
Built up a nice pile over the past 3 months, not looking to be greedy, just steady returns now.
With ICs I find it helpful to consider the premium being generated from each side. Making something up - if that $7 is $6 on the put side and $1 on the call side, then I'd do that as a put spread as I don't think that $1 worth of premium is enough for the incremental risk. But if it were $4 on the call side, then yeah - maybe so. Something I would evaluate.
Then again call spreads are dead to me
I do like owning leaps and selling covering calls on them. The income contribution is much smaller, but it's not trivial and can be a good contributor to the steady returns objective.
I did the same some months back, I was selling lcc's against 15x June 22 c700's, they went ITM and I rolled out to June 22 c780's - I pocketed a neat $192k for that with a guaranteed $120k if the SP was >$780, but look at it now, I threw away $500k of profits, maybe more
The opportunity cost was high, but you also realized some money and took on opportunity cost risk. There was no permanent loss of capital risk which depending on where you're at, and I think you're there, adding more to the pile just makes it harder to keep it stacked - it doesn't really alter your quality of life or range of stuff you can and will go do.
Adding on to this, for those with full time jobs, I'm curious how people structure their days (or even week) to incorporate/optimize their trading. I work a corporate job and I'm on the computer all day, so it's very easy for me to check, but I find myself greatly distracted and maybe spend too much time looking at my account/checking price movement. I'm wondering what steps people have taken to make things a bit more hands off. Do people have a rough trading plan at the beginning of the week, knowing that they want to enter into rough X positions (naked puts, spreads, condors, etc)? how are you laddering into your positions to make sure you have a full position by the end of the week (especially with recent days of just green)? I struggle with this as well.
NOT-ADVICE
This struggle is behind me, but what I was doing when it wasn't....
I like to keep the variety of strategies and actual positions I'm taking pretty small. Then again I'm not allergic to concentrated positions, so that might not be a good idea. Nonetheless I tend to sell the same put spread (as a for instance) in all 3 of the accounts I'm actively managing. Then my mental energy is going into managing the one position that needs three entry tickets, and three exit tickets.
I'm currently using two strategies on the sales side - put spreads and covered calls. Previously I was doing put spreads and call spreads. And before that I was doing short puts and short calls. I've tinkered off and on with other trading strategies, mostly to get a bit of experience. None of them have been good enough to either take over 1 of my two well used strategies, or to get added to the 2 that I'm using. I've begun thinking about also doing short puts in my brokerage instead of put spreads - if I do that then that'd get me back to 3 strategies that I'm making use of.
I DO occasionally establish a smallish aggressive position with the rest in my more typical position - so those would be some incremental management effort. But the idea stands - keep the range of positions simple, and repeat them many times so that the type and timing of entry, the timing on closes, all of that becomes repetitive and something you get better and better at (and thus take less and less time to do, both actual time as well as the mental energy to track and do it).
That's the week scale stuff. The other thing I do is I will frequently spend a small amount of time in the evening considering where we're at, what might happen tomorrow, and whether I want to be looking for a trading opportunity tomorrow and if so - what will that trade be? As an example for me right now - I've got some 1200 strike calls expiring this Friday. It looks like I could roll those to next week 1250s and pick up a $7-8 credit. I like that roll so I'm probably going to be looking to do that first thing. I might even enter that order tonight before I go to bed, so I get that roll first thing if its available. Meanwhile my put spreads are so new that I'm not planning to do anything. But wait - maybe the are SO far OTM that I could roll a bit closer, keep the same expiration, and pick up some worthwhile incremental premium (and incremental risk). I'll put a little time into gaming out that idea to see if its worthwhile (I might do it for an incremental $1.50, but not .50).
So I use my evening hours to game out some scenarios in my mind, so I can act tomorrow with less time and energy then.
I rarely ladder into positions. It's a great thing to do and I understand why its done. It just takes more effort and part of what I optimize for is less effort. My view on it - if the current position being offered is one that I like, then just open the whole position that I want and be done with it. It might get better, it might not - but I don't want the mental energy going into looking for that improvement. Worth noting - to identify "good" or "position I like", I need some idea of what enough or my target is. If I don't know what my target is, then 'more' is the target, and that can't be achieved
It’s amazing how one can get out of trouble by rolling a week, or alternatively receive a lot of extra premium. If today just before close you rolled a short call 1250 from 11/5 to 11/12 you would have gotten $27. And if you rolled with no extra premium you could have gone all the way up to 1370. Both the 11/5 1250 and 11/12 1370 are about $12.5.
I remember doing this with monthly puts, but it was much more difficult. I guess the weekly options are much more suitable for this kind of manoeuvring.
I tend to agree with your observation and agree that the weeklies are more suitable for this. Conceptually I think its easy to see why - when we roll, we start by buying out the time value on the current position, so we can sell the time value on the new position. The difference in time value between a 3 day and an 8 day option is really big (%; maybe also $), while the difference in time value between a 1 month and a 2 month option is not. It's both a % thing, as well as how close to expiration the position being closed is (everything else being equal, closing the losing leg as it nears expiration is better than earlier, but everything else isn't equal - my bias is to earlier rolls now; the bigger buyout on the losing position is associated with an even better sale on the new position).
So rolling a 1 week to expiration option out to 4 weeks might be a good choice for further ITM positions.
Something I got into the habit of doing when IV was much lower is to also evaluate the 2,3,4 week rolls, in addition to the 1 week rolls. If the 2/3/4 week rolls are more or less straight multiples of the 1 week roll, then I probably do the 1 week roll, so I get a sooner opportunity to win (shares reverse and I go OTM). I also get more frequent opportunities to adjust.
But I've also been in situations where the 1 week roll was for $1 or less and no strike improvement at 1 week, while the 2 week roll was much better than 2x the 1 week roll. Like a $1 credit and 1 strike improvement for 2 week roll - take the 2 week roll. And the 4 week roll might be much, much better than 4 of the 1 week rolls. NOT doing this evaluation is part of why my hell puts at the start of the year (roughly Feb through June) lived as long as they did. If I'd been doing monthly rolls when I went deeply ITM, then I'm pretty sure I'd have continued moving the strike closer and it all would have been resolved that much sooner and that much better.