If someone was bullish on HLF, selling these puts short for 8 would actually be a good trade. A good plan would be to roll down to lower strikes in case the price declines. It would not surprise me if someone like Icahn is already doing this trade.
If the share price were to drop to 40 within the next few months, he would make around 40% profit on his Jan 2016 put options. He could then start scaling out of his position. Another strategy would be for him to start selling short lower strike puts as the share price declines to create put spreads. But most likely, he is not planning to do any of these strategies. I agree that he is paying a huge time premium for these options. One of the most difficult decisions is when to take your profit. If he is determined to prove a point, he may end up holding these puts for too long and lose all of the premium.
Nice rally! Any Fed intervention today?
I think the Fed would be happy if the market just trades in a channel for the rest of this year, with a lot of volatility of course. Maybe with a lot of days like today, they could make enough money to pay off the national debt.
Which strikes do you own?
I only have options for BX. I have a core holding position and trading positions. Try doing some call spreads whenever it dips. You can acquire a position having an effective share price below the actual share price. For example: Jan2015 30/34 call spread for around 2.30, effective share price would be 32.30 (0.70 below current share price).
If you look at the 2 previous large declines for this year, Jan 23 and April 4, each one of these had 2 major down legs with a slight upward bounce in between. Now, is this the bounce before the second major leg down?
If you are now all cash, how are you planning to get back into the market?
Have you thought about how you are going to transition from a long position to a short position?
What do you think of the Jan2015 UVXY puts, either the 10.00 or 15.00 puts. If the share price drops by just 5, these puts should double in value. I am thinking of scaling in my purchase. If it continues to rise, I would start buying higher strike puts. Ideally, short term ITM puts would be bought near the top.
Does the Fed actually support the market by buying stock futures or option contracts? With essentially an unlimited amount of money to play with, the Fed could easily prevent any possible selloff while also making a substantial amount of money during the process.
I still remember back in 2009 when C had peaked in the low 5s (pre-split). I was staying in Atlantic City at the time. I ended up selling my long position. However, I did continue to do a lot of option selling to collect the premium. I finally stopped doing this after the reverse split. The stock is still trading in the same price range for the past 5 years. It looks like it will have to break out of this range before the buyers return.
In 2011, the market started declining around July 24, which is what also happened this year. The market did not bottom until early Oct. If this repeats, UVXY should at least reach 50.
It is now near the apex. Looks like it wants to break down.
Hey King, some of the guys on Fast Money today just recommended Citigroup. They mentioned it is below book value. Are you still playing it?
I have some other UVXY call spreads and SVXY put spreads. This portion of my portfolio is very small, around 4%. In addition to these, I have a small amount of Jan2015 OTM call spreads in SVXY. I will be adding to these spreads as the share price declines. I will also be day/swing trading SVXY with Aug and Sept calls.
At the current price of 11.69, you should be able to buy the March 6.00/15.00 call spread for a debit of around 3.65 This would give you an effective share price of $9.65 which is $2 below the current price. Max profit would be $5.35
Keep your shares while doing this as a secondary strategy. Profits from this will lower your cost basis.
I have some UVXY sept 35/45 call spreads for a debit of 1.65
Since this is a bullish strategy (3 calls to 1 put), it would appear to work best in a long term rising market. If you had bought on Jan 2, 2014 whe SVXY was 66, you would be holding the 92.00 calls. You would have made a nice profit, but only if you had sold near the high. However, if your buy date just happened to be this year's high price of 93, you would have ended up buying the 130.00 calls.
I just noticed that the 200 dma for SVXY is now at 68.33 This is the midpoint of the 52 week high/low. This morning, the SPY bounced off it's 100 dma.
What about the idea of buying on a monthly basis.
If SVXY is above it's 50 dma, you would buy one call (or one unit).
If below the 50 dma but above the 150 dma, you would buy 2 calls.
If below the 150 dma, you would buy 3 calls.
Any calls bought while below the 150 dma would automatically be sold when it rises above the 50 dma.
Does anyone have a program to back test this strategy?
Which options do you have now?