Interesting links

how-market-makers-buy-units-to-stay-in-business
I think that the first link is a very interesting strategy and something I would like to consider. To me this would had been a nice addition to the trade in ITMN. If I recall correctly the trade was long covered calls. So I think going out and buying really cheap puts or calls could had served well. I actually went back into the think or swim platform and looked at buying the $15 covered call which on 3/4 was going for 10.41 and buying the $35 calls that were going for 0.15 at the time. The stock was trading at 14.61. By 3/10 those way OTM calls that you purchased for 0.15 were worth 3.90 with the stock trading at 38.90. On this simulation I did a 100 covered call position and used about half of the premium collected to buy 10 calls. These calls that cost $150 now added $3,760.

I know I used the calls only because I remember what direction the stock finished and it was the easiest to illustrate. But I can see the power of the OTM "units" for buying puts on the downside as well. Or on stocks like ITMN maybe using all the premium collected to by OTM options on both sides. Anyways it got me thinking and I thought I would share.





how-option-time-premium-decays-over-the-weekend


Just thought this was interesting.