4REAL

Hey Kim, I got in GME early, meaning before ex-date for dividend of last Friday March13. I got in the (-March27 +April17) 3-week 40 call calendar. Last week I got this (standard) message from IB stating that there might be a risk of an early assignment. Thursday I called IB and they could not provide me a clear answer. All they could say was that, because of the dividend ex-date there was a risk, even if the calendar was OTM. Closing price Thursday was 39.70. According to IB the call buyer (for the short leg) could exercise till Thursday evening. To avoid a margin call I sold some calendars on Thursday, only to buy them back on Friday. In your experience was there in this case a real risk of early assignment ? Thanks for your insight CJ

Hey Kim, Thanks for your insight. The last SO RUT trade seemed quite easy. But there was your right timing to close the trade (avoiding stress) and the market moved like we needed it to move. Unfortunately the market is not always so accommodating....

Hi Bret, Sure these trades are riskier, but I appreciate it that you share them, it is food for thought and it helps me learn faster

Ok, Bret, Kim thanks for the answer

Hi Bret, At the risk of asking a stupid question Why do you play SPX instead of RUT ? A few weeks ago Kim pointed out that the IV of RUT options is significantly higher than SPX which means that the shorts with 15 delta (for RUT) are much further OTM which means one gets about the same credit for less risk. Has SPX other advantages over RUT ? Thanks CJ

Hey Kim, What is your take on this reverse iron butterfly ? eg SPY Jan16 +198 -206 call spread and Jan16 +198 - 190 put spread (priced around 5.50/5.60 debit) Could this be a play worth exploring in this enviroment or will this 4-leg spread also suffer if VIX dropes ? Is the risk/ reward ratio good enough ? thanks CJ after giving it some thought : Risk/reward ratio is not good max loss is debit (would in this case be 550) max gain could be 250 (800-550) at expiration So no need to explore this

Hey Kim, What is your take on a box spread ? eg SPY Jan16 +198 -206 call spread and Jan16 +198 - 190 put spread (priced around 5.50/5.60 debit) Could this be a play worth exploring in this enviroment or will this 4-leg spread also suffer if VIX dropes ? Is the risk/ reward ratio good enough ? thanks CJ

Hey Mukundaa, If you expect IV to decrease and stocks going to rally a play worth exploring is entering a SPY put bull spread In fact is it like the TLT-SPY pair we already have, but just the SPY-leg for instance short 200 strike and long 195 strike credit you get is 142 (for Jan16 spread) 153 (for Feb20 spread) Required margin is 500 maximum loss could be 500-142 (credit you get) = 358 exit target would be like TLT-SPY pair around -0.20 so if markets do rally profit could be around 100/ 120 downside is since this is a directional trade, you're not hedged if markets continue to tank. Other play could be buying the VIX call calendar spread we already have short Feb17 long March17 16 call at lower price

For VIX contracts you should count between $2.50 to $2.75 per contract

Hi all, What software can you recommand to track/ calculate return on trades ? Now I do it with excel, but when we start rolling it gets complicated. Thanks CJ

Hi Vancouver, Is the earnings date for AMZN already confirmed ? Since the short leg of your calendar expires Oct 24 or are you planning to close a few weeks before earnings ? thanks