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  • More SPY weeklies while Schwab plays catch-up

    When SPY dropped to 111 this morning I started feeling better about writing some calls.  All my weekly options from last week were assigned and I was not unhappy about being in cash earlier this week.   I bought SPY at 111.07 and wrote SPY 111 calls at .85 —they expire Friday.  My breakeven point is 110.22 and my best case profit is .78 per share  which is 0.7% on my investment.

    I called the Schwab options desk recently (877-673-7959) and they said that they do plan to offer weekly options, but not for a while.   The person I talked to said it would probably be a month or two.

  • Dealing with risk

    I’ve been thinking about various strategies for dealing with limiting losses.   Many investment strategies exhibit moderate upside potential, with large exposure to downside risk.  For example, on average the broad equity markets have shown annualized gains in the range of 10% over the long term, but these gains are often punctuated with large downside risks (market panics) that are deep and fast. This asymmetric behavior has discouraged many investors over the years–when a quick sequence of  losses overwhelms years of building slow profits.   This post on self evident shows that other people are thinking about this, and that the CBOE is developing a product that will attempt to counter the “black swan” events that the Longs dread.