OptionalSpy
股市纵横学习日记
正文
This strategy is suitable for RRSP with a big amount of money (at least start with 1x contract). It provides constant monthly money flow. Aimed at double every year.
(1) Identify the long term trend. long term trend is identified by 50SMA on weekly chart.
(2) use SDS (SPY ultra short) when long term trend is down; or SSO (SPY ultra) when long term trend is up.
(3) Buy the underlying and do monthly out-of-money(5-10% out) covered call on it with 5-10% premium.
(4) If the underlying goes up, don't do any adjustment, let the call expire on O/E day.
(5) If the underlying goes down, when it hits >10% down, buy back the sold call (right now 20% out of money, collect 5% premium), and sell new call at 10% out of money. Down another 10%, do the same once more. hold till O/E if the downturn continues. Analyse the market to see if the trend changes
(6) The strategy starts with selling naked put 5-10% out of money because the whole strategy is to collect the 5-10% premium a month, not betting on the underlying.
Points:
(1) Don't fight the trend. Always go with the trend. So buy SDS or SSO with the trend to make sure long term underlying is going up, or at lest NOT going down.
(2) because the double in nature, the volatility is doubled. this is to make up for normal slow movement for SPY.
(3) sell 5-10% out of money covered calls on the underlying to make money constantly instead of waiting for windfall. Depending on volatility, 5-10% out of money calls can still have 5-10% premium. Aimed at 5% premium every month. If the monthly movement is less than 10-20% (ie. SPY 5-10%), the premium is collected for free. If it's assigned, sell the underlying and buy back the underlying again. If the underlying goes down dramatically (it should NOT unless the trend changes), there's 10-20% protection on the downside.
(4) Another benefit to follow the trend is that the premium of call is bigger than against the trend as everybody expects it to go up.
At the time of the post, SDS is $108, 5wks to expire call @119 = $11.5
(1) Identify the long term trend. long term trend is identified by 50SMA on weekly chart.
(2) use SDS (SPY ultra short) when long term trend is down; or SSO (SPY ultra) when long term trend is up.
(3) Buy the underlying and do monthly out-of-money(5-10% out) covered call on it with 5-10% premium.
(4) If the underlying goes up, don't do any adjustment, let the call expire on O/E day.
(5) If the underlying goes down, when it hits >10% down, buy back the sold call (right now 20% out of money, collect 5% premium), and sell new call at 10% out of money. Down another 10%, do the same once more. hold till O/E if the downturn continues. Analyse the market to see if the trend changes
(6) The strategy starts with selling naked put 5-10% out of money because the whole strategy is to collect the 5-10% premium a month, not betting on the underlying.
Points:
(1) Don't fight the trend. Always go with the trend. So buy SDS or SSO with the trend to make sure long term underlying is going up, or at lest NOT going down.
(2) because the double in nature, the volatility is doubled. this is to make up for normal slow movement for SPY.
(3) sell 5-10% out of money covered calls on the underlying to make money constantly instead of waiting for windfall. Depending on volatility, 5-10% out of money calls can still have 5-10% premium. Aimed at 5% premium every month. If the monthly movement is less than 10-20% (ie. SPY 5-10%), the premium is collected for free. If it's assigned, sell the underlying and buy back the underlying again. If the underlying goes down dramatically (it should NOT unless the trend changes), there's 10-20% protection on the downside.
(4) Another benefit to follow the trend is that the premium of call is bigger than against the trend as everybody expects it to go up.
At the time of the post, SDS is $108, 5wks to expire call @119 = $11.5
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