re "I tend to only sell puts when I don't think that there's much downside potential, and only after there's already been a precipitous drop." I have been making hay selling puts after the crashes in TPX, FOSL, HLF, and a few others. At this point I scan the list of largest decliners each day looking for candidates. The day after the GMCR drop I sold May 22 puts for 1.22. They are wasting away fast now. I can't predict where GNCR will end up, but as lonf as it is above 22 next Friday, I'll be happy.
Re: GMCR - I too am long some stock, but I have been double and triple writing my long stock by selling calls @ 75 and above for almost every available month, simutaneously. So, the May drop comes along, and they are all near a penny. I am now writing Puts again (22 & 21 for May and June, while looking for opportunities to short large handfulls of calls for the front month, so long as they are 10 points or more out of the money. Just because a stock is down, doesn't mean you need to give up on it.
After a quick move higher on Tuesday's sell off, the VIX (VXX -2.6%) dives to its lowest level in a year, as calm (complacency?) reigns. John Spence notes investors cancelling insurance policies for market pullbacks by pulling cash from volatility-linked ETFs [View news story]
XIV, $VIX, VXX - I'm guessing that the VIX index and VXX are going to drop sharply this morning since I just sold a bunch of XIV in the premarket @ 10.08 when it closed at 9.70 last night.
Position: Still long a little XIV, but probably not for long
Making Lemonade Out Of Coffee [View article]
I have been making hay selling puts after the crashes in TPX, FOSL, HLF, and a few others. At this point I scan the list of largest decliners each day looking for candidates. The day after the GMCR drop I sold May 22 puts for 1.22. They are wasting away fast now.
I can't predict where GNCR will end up, but as lonf as it is above 22 next Friday, I'll be happy.
Making Lemonade Out Of Coffee [View article]
After a quick move higher on Tuesday's sell off, the VIX (VXX -2.6%) dives to its lowest level in a year, as calm (complacency?) reigns. John Spence notes investors cancelling insurance policies for market pullbacks by pulling cash from volatility-linked ETFs [View news story]
Position: Still long a little XIV, but probably not for long