That is about 30% return over just 9 months of the year. I expect to sell another put at 12.55 soon for a profit of 2,646 and the holding period will likely be shorter than 30 days. The WORST I have ever done with this strategy is 16% annualized.
Financial.Velociraptor,
Thank you for your thorough explanation of this interesting
trade.
I found it so intriguing that I was actually motivated to
register on this site just to pose a question.
If I've digested your thoughts correctly, it seems each
trade is oriented toward achieving an approximate x%
annualized return. Then you close it for a profit, and
turn around immediately and open another position.
Rinse and repeat.
I might have oversimplified it a bit, but that's the rough
gist of my takeaway. If I've understood it fairly correctly,
wouldn't it make sense to add a minimum 3 month
holding period into the discipline; or at least 3 months
between opening positions?My thoughts are that a new LEAP expiry opens up only
every 3 months. If you close a position earlier than 3
months, and then immediately open another position
with the same expiry as the one you just closed, aren't
you really just churning trading fees without reducing
your risk by rolling out to a longer-dated LEAP?
Maybe I'm missing something fundamental. Perhaps
the 2nd position would be at another strike, and would
therefore be more advantageous? Or could be gotten
at a lower volatility if you're prepared to wait a few
days to put the new trade on?
Any thoughts you might have would be appreciated!