Update 3-Feb-2011: Schwab recently added weekly and quarterly option support to all their trading platforms. See here for more information. Update: In March 2011 Schwab plans to introduce StreetSmart Edge™, their new flagship trading platform. Among other things this platform will include, “Major options trading improvements, including the ability to trade weekly and quarterly options.” When SPY dropped to 111 this morning I started …
Created a covered call position today with SPY at 106.89 and 107 SPY calls expiring this Friday–the 23rd. The calls sold (to open) at 1.18, giving a 1.2% best case profit for the week if SPY closes Friday above 107. Fidelity supports trading these weekly options, but apparently Schwab does not.
Anyone that trades options knows that the pace quickens the last few days before expiration. The delta (the change in option price relative to the underlying) for the ATM option is still around .5, but instead of gradual changes for the deltas on the strikes in / out of the money, the curve starts resembling a step function, going from zero for out-of-the-money, to …
I bought SPY at 111.64, and sold-to-open SPY 108 June-30 expiration calls at 4.08 for a net investment (debit) of 107.58. I used the quarterly SPY options because I could go considerably deeper in the money with the calls and still get a premium that is close to the likely SPY dividend for this quarter (around $0.50). Schwab does not appear to …
There is a lot of premium available on SPY options that will expire at the end of next week due to the recent market gyrations. I created a covered call, buying SPY at 117.26, selling-to-open May 117 calls at 1.69 for a net investment of 115.57. The Theta (time decay) on these options is $8 per day.
