Friday, June 25, 2010

Sold a little premium on this bounce...

As I mentioned in an earlier post I have positioned my portfolio to profit on the downside, which leaves me a little exposed to the upside move. But I think that the market is weak and will continue to be weak. I also think that 105 on the SPY will happen very quickly and if this level is broken which I think it will break, then I think it is possible that we see SPY 100 rather quickly. Where it goes from here I am not sure. But I think that this will be a huge phycological level. I am not sure about the head and shoulders pattern playing out or not but I do see the market going lower. With that said I have used this intraday bounce to sell some premium on some names I have been watching.

I sold 3 July '10 $155/$160 Call spreads on CMG @ $1, Notice the rounded top and bear flag formation coupled with a weak market. At initiation the 155 strike has a 25% of expirying ITM.

I also sold 1 July '10 370/390 Call spread on ISRG @ $1, Also weak and below the 50 day MA with the 370 at a 9% of expirying ITM:

This leaves me short about 260 SPY deltas on a beta wheighted basis and a positive theta of 30 a day. My goal is going to try to close these out by next Friday/following Monday. I am trying to exploit the 11 days of time value that will be wiped away from these options in the next 5.1 trading sessions. But also keeping the plays in line with my current bearish thesis.


  1. I would not be suprised and actually expect the market to turn negative by the close.

  2. So I was only expecting to hold these position until Friday but today I was able to close them for more than 50% of the total premium, so I did. Booking a couple hundred bucks.

  3. 50%, congratulations, nice trade.