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drbubb

OPTIONS Trading: SPY Puts versus SSO Puts, DUST etc

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OPTIONS Trading : SPY Puts versus SSO Puts, DUST etc

"This uptrend needs to clear that SPX 1998-2000 range before it can attempt to make it to the next pivot at 2019..."
- Tony C.

Latest: SPX-2001.4 : Chart (in edit): High: 2009.13 Low: 1994.01 / Close: 1999.99 // VIX: 16.86% // TonyC

2-Days: SOXXvsSPX / Other : SOXXvsIWM : iwmVspy : GDX-vs-UGLD

10 -d's: SOXX : SPX : SPY : IvsS : IWM : UKX : VIX : DXY / GLD vGBS : ugld : GDX : nugt : dust :
SPY-2d_zpsbewaylg7.gif

 

SSO - 2x etf on SPY ... 6mos : Latest: SPX Close: 1999.99 / SPY: 200.43 / SSO: $60.19 (H: $60.79 / L: $59.43)
SSO_zps3b6ulzea.gif

 

SSO ($60.19) Jun.$67p = ($7.40- $8.55): $7.98 /$67 = 11.91% : IV: $6.81, 85%, 10.2% / TV: $1.17, 15%, 1.74%
ac_zpswtjc21zc.gif

 

 

SPY (200.43) Jun.210p = (13.74-14.04): $13.89/210 = 6.61% : IV: $9.57, 69%, 4.56% / TV: $4.32, 31%, 2.06%
SpyJun210p_zpsahfri8q0.gif
Compare:
SSO$60.18- Jun$67p : $7.98 x 14 = $11,172 : 11.9% : tv$1.17, 15%, 1.74% > hi: $16 + 101%
SPY.200.43- Jun210p : $13.89 x 8 = $11,112 : 6.61% : tv$4.32, 31%, 2.06% > hi: $29 + 109%

.

Date-- : - VIX-- / -SPY-- : Bid - Offer : Jun210p: # $Value : JE200p D200p/ -SSO- : Bid - Offer : Jun$67p # : $Value /Sso-X
03/04 : 16.86% / 200.43: 13.74-14.04 : 13.89 x 8 = $11,112 : $8.30, 14.10 / $60.19 : $7.40-$8.55 : $7.98 x 14= $11,172 / $060
03/07 : 17.35% / 200.59: 13.41-13.67 : 13.54 x 8 = $10,832 : $8.35, 14.00 / $60.30 : $7.50-$8.85 : $8.18 x 14= $11,445 / $613
03/08 : 18.67% / 198.40: 14,85-15.14 : 15.00 x 8 = $12,000 : $9.00, 15.00 / $58.99 : $7.50-$9.65 : $8.58 x 14= $12,012 / $012
03/09 : 18.34% / 199.38: 14.16-14.42 : 14.29 x 8 = $11,432 : $8.86, 14.73 / $59.59 : $8.25-$8.90 : $8.58 x 14= $12,012 / $580
03/10 : 18.05% / 199.54: 14.18-14.46 : 14.32 x 8 = $11,456 : $8.75, 14.65 / $59.65 : $7.50-$9.50 : $8.50 x 14= $11,900 / $444

03/14 : 16.92% / 202.50: 11.76-11.99 : 11.88 x 8 = $09,500 : $7.03, 13.01 / $61.42 : $6.55-$6.90 : $6.73 x 14= $09,415 / -$ 85



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Are most leveraged ETFs made up of options?

I must admit that I generally avoid options like the plague, but I have been dabbling in the x2 and x3 leveraged ETFs that are available, especially as many of them are available to spreadbet at very tight spreads. Something like DUST is a sensible hedge if you are looking to protect some of your PM long positions, and unlike options it won't expire. It's down >80% since the miners exploded, and cannot go lower than zero.

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Using ETF's, and options on ETFS (for hedging stocks, Gold, and Gold shares)

 

Are most leveraged ETFs made up of options?

I must admit that I generally avoid options like the plague, but I have been dabbling in the x2 and x3 leveraged ETFs that are available, especially as many of them are available to spreadbet at very tight spreads. Something like DUST is a sensible hedge if you are looking to protect some of your PM long positions, and unlike options it won't expire. It's down >80% since the miners exploded, and cannot go lower than zero.

 

"made up of options"?

Not sure what you mean, but I reckon they hold an underlying portfolio of Futures, rather than options.

 

Thus SSO (which is 2X SPY/SPX) will be invested in S&P 500 Futures. with 2X gearing.

 

Thus, at SSO price of $59.00 today:

1,000 shares of SSO would be worth : $59,000, and that would be:

SPX Futures with face value---------- : $118,000 / 1,998.00 x $XXX : XX futures contracts

 

With this 2X gearing, any move in the SPY is magnified by 2X, and so we saw yesterday:

====

SPX : 1979.3 : - 22.5 : - 1.12%
SPY : 198.40 : - 2.19 : - 1.09% (yield 2.44%)
SSO : $58.99 : - 1.38 : - 2.29% (yield 1.31%)

====
The change in SSO was 2.10 times as big as the move in SPY, and 2.04 times the move in SPX

 

Note that as SPY rises, the value of SSO will rise twice as fast, day-by-day.
In effect, the profits made will get reinvested too (automatically)

The danger is in the downside, where a big move will shrink SSO faster

 

"Something like DUST is a sensible hedge"

 

DUST - 3x Bear etf on Gold shares ... All : 3-yrs : 2-yrs : 12-mos : 6-mos / 10d

DUST_zps5pklduba.gif

====
GLD : 120.58 : - 0.56 : - 0.46%
ugld : $12.11 : - 0.18 : - 1.46% (3x GLD) - similar moves to GDX??
GDX : $19.42 : - 0.98 : - 4.80%
nugt : $57.47 : - 9.40 : - 14.06% (3x Gold shares, Bull)
dust : $ 3.97 : +0.48 : + 13.75% (3x Gold shares, Bear)
====

Actually, I bought some calls on DUST just two days ago*, to hedge some of my mining stocks.

I am expecting to make about 3x the move downwards in GDX / Gold Mining shares.

 

*Bought 40 June 2 calls @ $2.05 - On the day it closed at $3.87 - so not much premium

on such a volatile share (up $0.48 yesterday, that's 2.7 times the TV , I paid... in 1 day !)

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DUST : "unlike options it won't expire.

It's down >80% since the miners exploded, and cannot go lower than zero."

 

It can keep falling and falling - and once down, may never recover old highs.

Sure. It cannot go below zero. But a choppy market can drive it lower and lower

- but there's no enduring asset backing it.

Because of the high gearing and volatility, choppy price moves can erode value very quickly. (!)

 

See what happened to both DUST (3x Bear) and NUGT (3x Bull) since they started trading

 

DUST ... All : 3yr : 1yr : 6mos / 10d : 2d

DUST-all-Log_zpsk8ti0axn.gif

 

NUGT ... All : 3yr : 1yr : 6mos / 10d : 2d

NUGT-all_zps3okdr6jh.gif

 

GDX ,,, 5yr : 3yr : 1yr : 6mos / 10d : 2d

GDX-5yr_zps2jm3n1jl.gif

 

GLD ... 5yr : 3yr : 1yr : 6mos / 10d : 2d

xx

 

GDX v Ugld: 3yr : 1yr : 6mos / 10d : 2d

GDX-vsUgld_zps5lbylaij.gif

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Stocks may begin the next big wave down, as soon as:

 

+ The wave-4 low for TZA (3X Bear on RUT / IWM) is in place ... update

 

ac_zpshyjzygy7.gif

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S&P, Dow hesitate at major resistance

MarketWatch:

Technically speaking, the market recovery attempt has reached major resistance, though the initial selling pressure has been muted.

Consider that significant S&P 500 overhead broadly spans from 1,980 to 2,020 — matching its 20-month and 200-day moving averages — an area that remains the immediate bull-bear battleground.

MW-EH488_201603_20160309092618_NS.gif?uu
MW-EH489_201603_20160309092620_NS.gif?uu

 

(Later : stocks jumped on Thursday - pre-opening)


t24_au_en_usoz_6.gif : idx24_hui_en_2.gif : idx24_russell_en_2.gif idx24_usd_en_2.gif :

 

SPY could Jump 2 points today - I captured these prices from Wed's close, to ponder my limit order:

===== : - VIX- : -Strike- : Jun'16 : diff. / Sept'16 : diff. / Dec.'16 : Dc-bid-offr : diff. :
199.38 : 18.34 : 200put :$ 08.86 : 0.09 / $ 12.07 : 0.13 / $ 14.73 : 14.64-14.81 : 0.17 :
199.38 : 18.34 : 198put : $ 08.01 : 0.10 / $ 11.28 : 0.14 / $ 13.57 : 13.50-13.64 : 0.14 :

 

(in edit):

I tossed an order in for the opening... Looks like it got hit. A Lucky trade !

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200 DAY Moving Average broken ? - may not be as important as some think

 

233 d - a fibonacci number, and

252 d - One year

May be more important

 

SPY - etf for the S&P 500 Index ... 2-yrs : 6-mos : 10d / SSO: 2-yrs : 6-mos / INDU: 2-yrs : 6-mos / Nasdaq : 2-yrs : 6-mos /

 

SPY-200d_zpsbjbejbx6.gif

 

Last Friday was a Bradley Turn date... and then 10d chart (click on link) shows there was a Gap up on friday

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