I wouldn't be surprised to see another up day on the market on Monday, but I'm skeptical that we will see much market recovery in the next couple of weeks. I'm planning on buying SPY if it dips to around 82 and writing covered calls on at least some of that. My bear spread (short SZCBC and long SZCBI) that I bought on Thursday for a 3.50 credit, immediately went the wrong way. Although the market went strongly the opposite way that I guessed the position is only down .95 right now. As the high side approaches the strike price the delta on it will start rising rapidly.
Tactics
- Only 10 trading days left on Feb Options
- Market order in to close out bear spread at 1.75 debit (worst case scenario is 5.0 debit)
- Buy-write specifics for SPY at 82, 10 days left, Debit of 82-3.50 = 78.5, implied Volatility of 54%, Yield 3%, Break-even with 4% decline.
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