Please note that the idea is NOT to hodl to SPX 4900 - a 15% runup in SPX is extremely unlikely, to say the least, given the runup already, and other macro headwinds. So both the max profit and the chance of profit should be ignored.
The plan is more to monetize around 4600 or higher, sometime in Dec. That’s hoping for a 6-7% price appreciation in 75 ish days to return 4-10x. Option market is putting a 20% chance of that happening, so about balanced R/R.
It feels like the wrong day to go long, given that we are up 1.41% on SPX already, and have had a 100 point rally. On the other hand, vol is dying, and vanna/charm flows from opex will kick in in earnest next week. So got smaller amounts than I normally would. And will top up early next week, unless the ETFs get stopped out. (Options will be rolled or … to valhalla.)
Bought Oct 13 (8DTE) XSP broken wing call butterfly for $0.05 credit, i.e. got paid to take this. Profits if SPX ends between 4375 and 4400 by next Friday (+2.5%) and then really starts hurting. However, the PCS sold above completely covers this (this is XSP, PCS is SPX), so worst case this is a bust.
UPRO (3x leveraged SPY) @ $41.88 - had to hold the nose a little as this is up 4% today already.
TQQQ (3x leveraged QQQ) @ $37.54 - up even more, at 5.5%.
Closed this out for $0.02 credit, so basically a scratch after commissions. We’re too close to where it will start hurting bad (+1%), and between FOMC and CPI tomorrow, 1% is easily possible. The PCS still rides.
Lower DTE makes it risky to hod over the weekend, but should be able to roll if Monday looks worse. Works out if over current levels by next Fri, though planning on taking profits around Wed.
Closed these out for $2.50. Kept $1.45 profit (37%).
Market is up nicely today, so holding the 4300 spreads for a few more days. This being 4340, made sense to close sooner since we could trace today over the next few days.
Sold half of these for $0.70 (+250%). Holding the rest till the end of the day. Given how quickly SPX is moving, don’t want to end up on the wrong side of the fly. This way, more than base capital is secured.
Eh, closed the rest out for $1.00 (+400%). Was wanting to hold till the end, but if vol drops as we expect and market moons, this will be wasted. So locking in profits half way of what it could be.
Works out if SPX closes between 4231 and 4269 (~ -1%) tomorrow by expiry, and closer before. Fully expect them to expire worthless, given the mad strength markets are showing, so small position. Nevertheless… this kind of overextension inevitably results in a consolidation or pullback, just a question of when.
Reasoning: It’s opex today, and we’ll unpin from 4500. Given the mad rally recently, we may get a pullback, maybe even enough to close some or all of the gap to 4400 that the CPI print left behind in the dust. 20SMA also happens to be around 4400.
The following filled last Friday. I got some more put and call flies, as there was no signs of unpinning into end of Friday. Which is somewhat surprising … so decided to play both sides.
