Having the highest implied volatility of all the SPDR's currently, I'm looking to sell a small amount of premium here at the 30 delta strike approximately 45 DTE as a possible alternative to doing a covered call in a mining underlying (such as GDX, GDXJ, KGC, AUY, HL, etc.).
Here are the metrics:
Probability of Profit: 74%
P50: 89%
Max Profit: .66 ($66)/contract
Max Loss: $2384 (if the stock went to 0 between now and expiration, and you did nothing)
Buying Power Effect: $245/contract
Break Even: 23.84
Notes: As with all premium selling setups, I look to take off the trade at at least 50% max profit. However, since this is a naked short put, I look to roll the option out for duration when the value of the put exceeds twice the credit received (which means price has moved toward the short put, such that its value has increased). When that occurs, I roll the short put down and out to a strike and an expiry in which I can receive a credit for the roll.
Here are the metrics:
Probability of Profit: 74%
P50: 89%
Max Profit: .66 ($66)/contract
Max Loss: $2384 (if the stock went to 0 between now and expiration, and you did nothing)
Buying Power Effect: $245/contract
Break Even: 23.84
Notes: As with all premium selling setups, I look to take off the trade at at least 50% max profit. However, since this is a naked short put, I look to roll the option out for duration when the value of the put exceeds twice the credit received (which means price has moved toward the short put, such that its value has increased). When that occurs, I roll the short put down and out to a strike and an expiry in which I can receive a credit for the roll.
Comment:
Got this filled for .60. Were I to have been patient, I could've gotten filled for that .66 ... .
Trade closed manually:
Covering today for a .35 db. Net profit of $24/contract after fees/comms. Small winner, but I figured I'd reduce some exposure to miners on this little pop here. I've got "a few" individual names on ... .
