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I ALSO on the other 1/5 did the following: STO Sep 13 161 Put @ 0.12

In answer to the previous questions: This is NOT a delta neutral strategy, and is never meant to be one -- but it does not have to be in order to be profitable. Similar to the anchor strategy, as long as we capture the extrinsic values we need, we're good. We use the ratio to improve our odds in the event the market moves dramatically to the negative (when using puts as we do). For instance, on the 4:5 ratio that I employee, if we were opening the trade today, the short position would have a delta of .62 and the long would one of .52. (This is also why I use two weeks out on the short instead of one). So what happens if SPY drops 5 points? (assuming a linear application of delta, which isn't 100% accurate, but it's what I'll use for this example), we'd assume a loss of 12.4 on the short (.62 x 5 x 4) and a gain of 13 on the longs (.52 x 5 x 5) -- in other words, almost even. Now what really happens is the delta spread accelerates faster on the shorts, so I would actually expect a small loss on the shorts. The option calculator says, the shorts will lose about 13.5 and the longs will gain 13.1. The FURTHER the market drops though, the closer they get -- which means at some point the longs are always gaining faster than the shorts (since its a 4:5 ratio). Once the position gets DITM on the longs, I'll switch to a 1:1 ratio for that very reason (so as not to lose on the rebound, if and when it occurs). Also, once you get closer to a 1:1 delta ratio, DITM, I may switch to only one week out to allow for more flexibility on rebounds. In other words, I don't have to be delta neutral, because I use the ratio. Now, if there's just a SMALL market drop (as in SPY drops 1-2 points over the week), you can lose ground if you're not getting enough extrinsic value because your shorts lose money, as do your longs because long term volatility might decrease. But as long as we're getting the extrinsic we want, the position works --_ OVER TIME. It can be bad in the first weeks, particularly if you get small adverse moves (as occurred here), but as those extrinsic credits build up, the trade profits. I also have started to "cheat" a little. Let's say I sell the SPY 162 short on a 4:5 ratio. I don't just "hold" the other 1/5 position out there. I sell it as well -- just as far OTM as I can only one week out. For instance this week I shorted, on the 4:5 ratio, two weeks out, the 165 puts. But I also shorted the "other" 1:5 ratio only one week out, the 159 puts. This netted me an extra .11 credit. Those add up over time.