what to do on a call credit spread with assignment

People with ropes around their necks,
don't e'er hang.

-Angel Eyes (Movie: The Good, The Bad and The Ugly)

The subject area for this week's commentary is to examine the Good, the Bad, and the Ugly of Short-Strike assignments for Vertical Bull Put Credit Spreads. – OptionsTradesByDamocles

Commentary

Lee Van Cleef (Angel Optics)

During the last ten days, Tech stocks barbarous to "correction" territory (a drib of ten% or more from the most contempo high). The ETF/QQQ (i of my goto spread underlying avails) dropped over 10.ix% in just a few days, and information technology temporarily threw the Brusk leg of two of my working positions into ITM (In-The-Coin).

Even though these two endangered QQQ Vertical Bull Put Credit Spread all the same have a few weeks to expiration, going through several of these ITM flags terminal year set off my sphincter-clenching alarm. I need to be enlightened of what can happen and what my options are to answer. I don't want what to happened to my account last twelvemonth to happen once again this yr.

Contents

• My Short-Strike Went ITM – Now What?
  • Options Contracts
  • Short vs Long Strikes
  • Other Players (Options-Verse)
  • Long Strike's Obligations
  • Brusk Strike's Obligation
• The Good – Wide Strike Assignments
• The Bad – Assigned at Expiration
• The Ugly – Early Consignment

My Brusque-Strike Went ITM – At present What?

It is never skillful news when the Curt Strike of my Vertical Bull Put Credit Spreads falls into ITM. That means that my Spreads' underlying asset toll has fallen significantly since the position was opened, and now they are in danger of becoming losing positions.

I practise non want to brand a knee-jerk reaction, so the first matter to do is to review how my spreads work –

Options Contracts

Buying or selling Options requires me to enter into a contractual agreement with my banker. Ane clause of that agreement is to admit that Options are managed in 100 share lots. Thus, when I sell one Put contract, I am contractually binding myself to buy 100 shares of the underlying at a predetermined cost (the "Strike Cost"), should my broker demand.

Additionally, if due to an assignment and I am required to purchase 100 shares of the underlying nugget, and if I practise not have enough cash in my account, my broker tin indiscriminately sell whatsoever funds I accept to encompass the toll.

Short vs Long Strikes

When I open a new Vertical Bull Put Credit Spread, I am inbound a position that includes 2 different put-options transactions – a Short Put and a Long Put.

1. TheCurt: I will sell one put option contract that volition become my Brusk leg (short because I am selling an option that I do not own, then I am literally short that contract).
2. TheLong: At the same time, I volition purchase one other put contract that will go my Long leg (long because I volition own that contract and I can do with it as I want for as long as I want).

Other Players (Options-Verse)

For me to enter into this spread, someone else within the Options-poetry volition accept to purchase a put with the same configuration as I want to sell. Likewise, someone will accept to sell the aforementioned put configuration that I want to buy. Those "someones" don't demand to be the same someones.

The point to make is the purchase and sell transaction betwixt two separate people does not create a connected pair (someone did not buy my put, but rather 2 puts with the aforementioned configuration were both bought and sold at the same time.) Thus, the fate of my Vertical Bull Put Credit Spread is NOT appreciative to a specific private.

All options transactions are rolled up from the brokers to the "Options Clearing Corporation (OCC)" – the arbiter of the Options-Verse.

Long Strike's Obligations

My buying a put choice does not obligate me at all. I already paid for information technology so technically, my part is done. I can sell it when I want, and I can practice it if ITM or I can keep it until the contract expires – all my options.

Short Strike's Obligation

On the other hand, if I sell a put option, it comes with some obligations on my part. The most significant office of this obligation is that if the underlying asset for my Brusque-Put falls enough to go ITM, then I am accountable to my banker of honour the sell-contract agreement. That agreement states that if my broker "chooses," they can demand that I buy the 100 shares of the underlying at the agreed price. Or, my broker tin can also wait until a afterward time to make the consignment telephone call. Or maybe non brand the telephone call at all.

But if the Choice contract expires with the Short option ITM, and so the assignment will be automated and unforgiving.

The Ugly

Just considering my pre-expired choice contract went ITM does not hateful it will exist assigned.

Early Consignment

If my put pick contract has not withal expired, but the underlying asset'southward toll falls below the Brusque-Strike toll, so I am in danger of consignment. Simply to be assigned, certain events need to happen:

• Someone within the Options-Verse who owns (bought) a matching put option will demand to initiate his right to practise his option. His banker will non hesitate to award his request by:
  1. Borrow money from his account's margin
  2. Buy 100 shares of the underlying nugget on his bear from his broker'southward inventory at the current asset price
  3. Sell 100 shares of the assets back to his broker at the contractual put option price (Strike Price)
  4. Payback the coin borrowed from his margin account (the business relationship owner keeps the difference)
  5. Voids/removes the exercised put option contract from his account
  6. Notify the OCC of the exercising transaction

• Through an equitable selection process, the OCC (Options Clearing Corporation) will decide which brokerage firms volition be responsible for completing the consignment.

• If the OCC selects my brokerage business firm, it will have a standardized lottery process to make up one's mind how the assignment will be allocated across all accounts. If I am unlucky enough to have my business relationship picked, on my carry my broker will:
  1. Borrow coin from my business relationship's margin
  2. Buy 100 shares of the underlying from my broker's inventory at the contractual put option price (the Strike Toll)
  3. Sell 100 shares of the underlying back to my broker at the contractual put option price current asset price
  4. Payback the money borrowed from my margin business relationship from the cash in my trading account
  5. Removes the assigned put option from my business relationship
  6. Notify the OCC of the assignment transaction.

Note: At that place is a "Aforementioned 24-hour interval Substitution" rule for the brokers that volition exempt the margin interest charges if the buy/sell transaction happens the same 24-hour interval.

• The OCC with finally settle the transaction differences between the brokers.

For my pre-expired option contract to be assigned, I will have to be unlucky plenty to have my banker selected to fulfill the assignment and have my account randomly chosen by my broker. It does happen, but non ever.

The Bad

What is not random is having my short selection be ITM at expiration.

Assigned at Expiration

If the contract expires one penny or more ITM, then the aforementioned do/assign process outline to a higher place will also happen, but at that place is no banker selection or random picking of an account.

The Expert

Spread Traders who have the Short-Strike assigned,
don't always lose.

One lesson that I learned last year is the wider strike-width that I constructed in my Vertical Bull Put Credit Spread, the more loss-tolerant my position volition be. (I refer to a future post, "How To Make Loss Resistant Vertical Spreads – Strike Width")

My maximum money risk on whatever Vertical Balderdash Put Credit Spread is the dollar difference betwixt the Brusk Strike and the Long Strike time 100 (one options contract assumes 100 shares). The actual price of the underlying asset just has a marginal issue on my overall risk.

If I accept a spread position where the short option is ITM at expiration (and thus assigned), then what will be subtracted from my cash account is the option'southward short strike price – the asset's electric current price.

One Strike Width

Reference Vertical Bull Put Credit Spread position:
DIA: 280p/279p; Open 03/ten/21; Expires 04/16/21; Max Gain=$13.00; Max Loss=$87
Causeless the DIA toll at market close on 4/16 = $279.87

$279.87 is xiii cents below $280 at expiration, then this short optionwill be assigned. I will accept to buy 100 shares of DIA at $280.00 and then sell it back to my broker for $279.87. The cost to my account volition be ($279.87 * 100 = $27,987) – ($280.00 * 100 = $28,000) = -$13.00. Since I collected $13.00 when I open the spread, this volition exist a break-even transaction.

And so technically, if DIA closes higher than $279.87 at expiration, and so even though it volition be assigned, I all the same made a profit.

15 Strike Width

Reference Vertical Bull Put Credit Spread position:
DIA: 280p/265p; Open 03/10/21; Expires 04/xvi/21; Max Gain=$160.00; Max Loss=$1,340
Causeless DIA price at marketplace shut on 4/xvi = $278.40

$278.40 is $1.threescore below $280 at expiration, and so this curt optionwill be assigned. I will have to buy 100 shares of DIA at $280.00 so sell it back to my banker for $278.xl. The cost to my account will be ($278.40 * 100 = $27,840) – ($280.00 * 100 = $28,000) = -$160.00. Since I collected $160.00 when I open up the spread, this volition exist a break-even transaction.

What's the Difference

The one strike width position only has a xiii cents cushion. Should DIA shut down below $279.87, then this position falls in the losing column. On the other hand, the xv strike width position has a $1.60 cushion. DIA can autumn to $278.41, and I nonetheless brand money.

The divergence gives me ($1.sixty – $0.13 = $1.47 / 280 =) .525% more opportunity to exist a winner. (I'll accept information technology!)

Nearly this Tech Correction

Corrections are a normal part of the ebb and period of a bull Stock Market. Historically, the marketplace will recover from corrections and move on to new highs. I volition look at corrections as the blowing off the froth from a newly poured glass of beer – and then add a lilliputian more brew to top-off the glass.

This Week's Market Sentiment

(As of 03/8/2021)

In this department, I review five indicators: VIX, S&P 500 Put/Call Ratio, Southward&P Market place move, Consumer Sentiment Alphabetize, and Geopolitical events that could impact the market'due south direction. I will use these indicators to help guide my trading decisions for this week.

This Market Sentiment Department is typically completed by midday Monday morning. By the time this journal is published, it volition be a week old.

VIX: Broad Market Volatility

VIX 9-Day SMA stayed flat at 25% by the terminate of last calendar week, from 24% the week before. The 1-week deviation was +/- i.97 per centum points (thrashed 8% of the electric current 24.66%) and ended up pretty much where the week began.

The VIX is an emotion-gauge for the general investing population. It is thought to be driven by the Marketeers' current level of greed or fearfulness. Equally a one-month forrard-looking volatility matrix, it is not designed to tell us which management the market will be going, simply more of how fast it can get there.

A VIX of 15% is assumed to exist a market place at residuum. But since the intrinsic nature of the Stock Market is to move upward, a VIX closer to fifteen% or beneath volition accept an innate tendency to ascension.

CBOE Market Volatility Index – 03/07/2021

The i-month Regression Channel for the VIX reversed its trajectory to propose more volatility may come from the unsureness of rising involvement/inflation rates. With the added news of Treasury bonds now on the rise, concluding week's market thrashing was a proficient illustration.

The VIX currently is 25%, and has dropped below the 9-Day SMA, suggesting improvement. But the 9-Day is still above the l-Twenty-four hours SMA. In the last ii days of last calendar week, the VIX fell virtually four%, indicating a calming.

Since the VIX continues to hover above 15, flew past the aqueduct's Resistance line, and the one-calendar month trajectory is moving north, it would seem the Marketeers are at an elevated charge per unit of jitters. I would initially set this week's DEFCON (Options Trading Readiness Signal) level to 3. Let's see if the other indicators will change this level.

DEFCON = iii

Put/Call Ratio:

Put Options are oft used as protections against existing investments falling. When the ratio between Put Options bought versus Call Options bought is in a higher place 1, and so this is an indicator that the Marketeers are buying insurance to what they may see as declining Markets. Conversely, when the Put/Telephone call Ratio falls beneath i, then there is a general sense that the broader Markets will increment, and more investors are buying more than selling.

S&P 500 Put/Call Ratio – as of 03/07/21

The interest shock of the past couple of weeks gear up the Marketeers into a CYA mode as the Put/Call Ratio dipped a piddling from 0.63 last week to 0.56. This reinforces the notion of market jitters have continued through concluding week and supports the current DEFCON setting. The telling question will be if this continues to rising on Mon/Tuesday of this coming week.

The ratio beingness above 0.56 is not a butt-clenching event, but it does back up the DEFCON level 3 from the VIX section.

Maintain DEFCON = iii

Consumer Sentiment Alphabetize (CSI):

Equally of February, 26 '21 CSI'due south level stayed by and large lower at 76.8. ( ycharts.com )

This Consumer Sentiment Alphabetize (CSI), as provided past the University of Michigan. This indicator tracks United states consumer sentiment based on surveys on random samples of U.s. households.

A depression rating is a general dissatisfaction with our current management of U.Due south. economic policies. This dissatisfaction will imply that something has to modify. A high satisfaction rating suggests approval of the electric current policy management and implies market stability.

Updated: 03/07/21

The Us Consumer Confidence index was unchanged from terminal calendar week'due south chart. The full general sentiment that the economy remains stagnant every bit the pandemic starts to wind down, and all eyes are on Washington to see how they will go on.

This index lever reinforces that electric current DEFCON level.

Maintain DEFCON = 3

Market Indexes:

DOW (DJX) = 31,496 – Upward i.viii% from 30,932 terminal week. (iv calendar week deviation: ii.2, downward from 4.8 concluding calendar week)
S&P 500 (SPX) = 3,842 – Up 0.8 % from three,811 last week. (4 calendar week deviation: 45.eight downward from 58.2 week)

The S&P 500 is a stock market alphabetize that tracks the 500 largest companies in the U.S. This alphabetize represents most lxxx% of all the capitalization for the country. The S&P is widely considered the best indicator of how all the U.Due south. markets are performing.

Daily S&P 500 Index – Four-Months (Updated 03/07/2021)

The S&P 500 continued the downturn from the calendar week and briefly falling below the Trend-Channel's resistance line before returning. Also, dropping beneath the fifty-SMA for a curt while is confirming the high level of jitteriness.

Market Thrashing

4-Week Thrashing of DJX = +/- ii.2 points or < 0.1% of the market's book. Flat from < 0.ane% terminal week.

4-Week Thrashing of SPX = +/- 48.8 points or one.2% of the market's volume. A slight calming from 1.5% concluding week.

The iv-Calendar week thrashing ratios disguises the genu-wiggle reaction over the by ten days, where both the S&P and DOW continue to see some hefty swings.

Even equally this interest rate causing the Marketeers to pull dorsum at the stop, I'k inclined to call back of this as a market adjustment to what is inevitably coming. I believe that we are on a bullish track notwithstanding crude seas ahead.

Then far, all indicators are signaling caution ahead.

Maintain DEFCON = 3

Geopolitical Tree-Shakers (GTS):

One way to look at the GTSs is like a lit fuse to a bomb. The fuse can be fast or slow, and the bomb tin can easily be a dud. But I need to spotter this closely equally an indicator. The GTS can significantly disrupt all the other indicators at the drib of a hat.

• Texas and Mississippi are dropping callous COVID restrictions
• Increase vaccines becoming bachelor
• Becoming hyper-aware of the inevitable ascent of involvement/aggrandizement rates
• $1.9B Stimulus Bill passed the Senate this week – likely to pass House this coming calendar week
• Tech Stocks brushes with Correction Territory this past Friday
• The 10-Yr Treasury Notes volition go on sale this Thursday

Rebuilding the decimated small-business concern sector will raise the involvement rates – as supply-and-demand dictates. And rising interest rates are ever a competitor to stock as many Marketeers start selling stocks and buying bonds. Only this kind of shift in the equity markets has always been quickly absorbed and market adjustments always rebound.

The passing of the enormous Stimulus Bill should take a short-term counter effect to the marketplace's slippage. But there was zippo in the bill that bolstered the SBA greenbacks inventory, assuring plenty money can be borrowed without increasing competition for those bachelor funds.

The Tech Sectors, which was on a tear for the by year, is beingness hit particularly difficult from inflation fears. QQQ has fallen 9.five% from its recent high of 336 in mid February. But this beating seems to be localized in the Tech Sector and not the broader markets (although it seems to be pulling them downwards).

Maintain DEFCON = 3

My sentiment for this coming week:

There is a general wrinkle in economic and political concerns at the moment. Although the CSI indicator is being a little blind to the environment, a sense of growth for the US economic system is evident. And this growth will inevitably raise interest rates, and inflation will follow – merely not all this week.

Over the past ten days, the market restrictions should level off as the Marketeers adjust to higher interest rates.

Nosotros are definitely non at DEFCON 2's door merely solidly at DEFCON 3.

Trading Readiness Level

DEFCON = 3

This calendar week, I will focus on:

QQQ may now provide an opportunity for a higher premium. AAPL, MSFT, AMZN, and TSLA make upwardly a third of QQQ's assets. And since all these companies are mega-money-makers, I don't encounter this correction to be anything else than taking profits on an outstanding last 12 months.

• One xv-Strike-Width spread mid to tardily calendar week. If the Marketeers are pointing to a rebound, I may go for i xv-Strike-Widths and one 10-Strike-Width spreads. This choice volition violate my max gamble for the week.
• Spread term of 8-weeks or less.
• Probability of OTM > 80%

If the underlings for all my ETFs on the Lookout-List go on to retreat during the week, I will delay opening new positions until late in the calendar week.

Greenbacks Period Argument

(As of 03/12/2021)

	Year 2021	Calendar month Mar	Week #10
Beginning Account Balance	$xvi,000.00	$16,486.26	$16,587.24
Deposits (Div. & Int.)	$0.23	$0.00	$0.00
Withdraws (paycheck)	-$600.00	-$0.00	-$0.00
Premiums on Open up	$1,545.01	$350.00	$248.00
Premiums on Close	-$91.00	-$12.00	-$12.00
Fees Paid (total)	-$21.04	-$4.08	-$3.06
Ending Account Remainder	$sixteen,820.18	$16,820.xviii	$16,820.18
Total Gain/Loss	$820.eighteen	$333.92	$232.94
ROR		two.0%	1.4%
ROC	5.1%

Realized Profit by Strategy

	Year 2021	Month Mar	Calendar week #10
Vertical Bull Put Credit Spread	$511.71	$78.95	$78.95
Vertical Bear Call Credit Spread	$0.00	$0.00	$0.00
Vertical Bull Put Debit Spread	$0.00	$0.00	$0.00
Vertical Bull Call Debit Spread	$0.00	$0.00	$0.00
Icon Condors	$0.00	$0.00	$0.00
Margin Interest	-$0.53	$0.00	$0.00
Full	$511.eighteen	$78.95	$78.95

Schedule for this Week

Goals for this week: (03/08/2021 – 03/12/2021) (Calendar week #x)

• Document lessons learned or new thoughts
• Open one or two broad-strike spread
• Update Trading Log as trades occurs

Mon:

• Determine/update this week's market sentiment department
• Calculate/record Put/Phone call Ratios for all stocks on the sentry listing
• Review/tweak Tendency-Channels for all stocks in the sentinel list
• Set target expiration dates for all options as follows:
  • Balderdash Credit Spreads: Apr 23 (six-eight weeks)
    Note: If at that place are no Options Chains published for the 8-calendar week expiration, then utilise the side by side Options Chain downwardly from 8-weeks (7-weeks, six-weeks). Beyond four-week expirations, only the monthly chains are available to trade.
• Look upwardly Ex-Dividend dates for positions in/approaching ITM (MarketWatch/Calendar)
• Stage possible trades for all watch listing stocks by 10:00 AM
• NO TRADING Before 10 AM. (Let the Market find its direction after the weekend.)
• Watch ane Webcast or take ane online mini-course to be completed past Friday.

Tuesday – Thursday:

• Review how yesterday's staged trades moved. Conform premiums to take advantage of movements.
• Submit a couple of Spreads, only continue a close lookout man. If one is accepted, cancel the others (we want just one new active merchandise per day).
• Be mindful of Entry Rules.

Friday:

• Review the total technical dollars at risk for this calendar week. If significantly beneath $500, then submit additional spreads if prudent.
• Update and mail weekly journal (this blog) with whatever lessons learned or strategy changes.

This Week's Trade Activity

(Equally of 03/12/2021)

Spread Count Summary:

	Year 2021	Month Mar	Week #10
Vertical Balderdash Put Credit Spread	15	three	ii
Vertical Bear Telephone call Credit Spread	0	0	0
Vertical Bull Put Debit Spread	0	0	0
Vertical Balderdash Telephone call Debit Spread	0	0	0
Margin Interest	1	0	0
Total	16	3	2

Electric current Dollars at Adventure:

	Year 2021	Month Mar	Week #10
Vertical Balderdash Put Credit Spread	$8,582.	$3,150.	$ii,252.
Vertical Carry Telephone call Credit Spread	$0.	0.	$0.
Vertical Bull Put Debit Spread	$0.	$0.	$0.
Vertical Bull Call Debit Spread	$0.	$0.	$0.
Iron Condor	$0.	$0.	$0.
Full Dollar Risk	$8,582.	$iii,150.	$ii,252.
Max Take chances Allowed	$xvi,000.00	$8,000	$2,000.

I deliberately over shot my weekly max dollar risk limit past $252. Coming off a 2-week Correction cycle, I am feeling that this is taking advantage of a depressed market as it rebounds. Nosotros'll see if I'yard right.

New Trades Opened This Week

(03/08/2021 – 03/12/2021)

IWM: 205p/195p  – Open 03/xi/21 – Expires 04/23/21 – Max Proceeds = $103.00 – Open up Toll = $230.45
(Vertical Bull Put Credit Spread)
At Open: Prob. OTM=lxxx.five%, Caput Room=-11.4%, Max Loss=$896.00, ROC xi.4%, 43d Dev = 6.5

Entry Rules for Vertical Bull Put Credit Spreads:

• Current maximum dollars at risk < $16,000? Yeah ($9,489)
• Max dollar at risk this week < $2,000? No ($2,252)
• Max time to have any dollars at risk < viii weeks (<56 days)? Yes (43 days)
• Long-term trend (iv months) bullish? Yes (encounter chart)
• Short-term trajectory of the underlying bullish? Yes (see chart)
• Put/Telephone call Ratio < one, (or falling if it is > ane)? Yes (ane.5 falling from 3.7)
• Current price above ix-Twenty-four hour period SMA?: Yes (meet chart)
• 9-Day SMA in a higher place l-Twenty-four hours SMA?: Yep (see chart)
• Short-strike < 1 SD beneath the current cost? Yes (1SD=206.70)
• Short-strikes Prob-OTM > 80%? Yep (80.5%)
• Curt-Strike price below the trend channel at expiration?: Aye (see chart)
• Current price inside the bottom 1/2 of Tendency Channel?: Yes
• Long-strike at maximum width (<= 15)? Yep (10 strike width)
• Gear up a GTC Provisional Trailing Finish Limit (CTSL): (Not Fix)

This new position violates my maximum dollar hazard for the calendar week rule. Simply the markets are recovering from a Tech Correction, the reported Inflation charge per unit was 1.2% as expected, the 10-Year Treasury Note auction this past Wed set up interest rates lower than expected, and Congress passed the $ane.9T Stimulus Beak. All these actions bespeak a market bump that should keep this week'southward new position OTM (fingers cross).

QQQ: 270p/255p  – Open 03/08/21 – Expires 04/23/21 – Max Gain = $145.00 – Open Price = $308.79
(Vertical Bull Put Credit Spread)
At Open: Prob. OTM=81.vii%, Caput Room=-12.5%, Max Loss=$one,354.00, ROC ten.6%, 46d Dev = 8.nine

Entry Rules for Vertical Bull Put Credit Spreads:

• Current maximum dollars at risk < $sixteen,000? Yes ($eight,592)
• Max dollar at risk this week < $2,000? Yes ($i,355)
• Max time to have any dollars at run a risk < viii weeks (<56 days)? Yes (44 days)
• Long-term tendency (four months) bullish? Yes (see nautical chart)
• Brusque-term trajectory of the underlying bullish? No (see chart)
• Put/Telephone call Ratio < 1, (or falling if it is > 1)? Yes (one.2 falling)
• Current price in a higher place ix-Day SMA?: No (encounter chart)
• 9-24-hour interval SMA in a higher place 50-Twenty-four hour period SMA?: No (run into nautical chart)
• Short-strike < 1 SD below the current price? Yep (1SD=271)
• Brusque-strikes Prob-OTM > fourscore%? Yep (81.7%)
• Brusk-Strike toll beneath the trend aqueduct at expiration?: Yes (meet chart)
• Current price within the bottom ane/ii of Tendency Aqueduct?: No
• Long-strike at maximum width (<= fifteen)? Yes (15 strike width)
• Set a GTC Conditional Trailing Stop Limit (CTSL): (Not Ready)

This is a high risk position since it violates some of my most strictest rules. But I opened this for these reasons:

• QQQ has already fallen into correction territory, but SPY, DIA and IWM are still moving up. This as been a Tech Sector just correction. Since the Techs have had a banner year, I'thousand betting that this is just the Marketeers cashing in on some good profits.
• A third of QQQ's avails are fabricated up of AAPL, MSFT, AMZN and TSLA. These companies are not reporting whatever fundamentals issues that would support their drib in stock prices (not yet). These companies are mega-coin-makers and should bounciness dorsum.
• I'm going out on a limb to bet that QQQ volition NOT fall another 10%.

Trades Currently Cooking

(As of 03/12/2021)

IWM: 195p/185p  – Open up 03/02/21 – Expires 04/xvi/21 – Max Gain = $102.00 – Open up Price = $223.41
(Vertical Bull Put Credit Spread)
At Open: Prob. OTM=81.two%, Head Room=-12.7%, Max Loss=$897.00, ROC 11.3%, 45d Dev = 6.6
Now: Prob. OTM=89.6%, Head Room=-15.7%, Four%=7%

IWM: 195p/185p  – Open 02/24/21 – Expires 04/16/21 – Max Gain = $99.00 – Open Price = $224.68
(Vertical Bull Put Credit Spread)
At Open up: Prob. OTM=81.half dozen%, Head Room=-xiii.ii%, Max Loss=$900.00, ROC 10.9%, 51d Dev = 8.vii
Now: Prob. OTM=89.vii%, Caput Room=-15.viii%, IV%=7%

SPY: 360p/350p  – Open 02/19/21 – Expires 04/01/21 – Max Gain = $85.00 – Open Price = $391.93
(Vertical Bull Put Credit Spread)
At Open: Prob. OTM=81.4%, Head Room=-8.1%, Max Loss=$914.00, ROC ix.2%, 41d Dev = 6.3
Now: Prob. OTM=89.six%, Head Room=-viii.vii%, 4%=22%

QQQ: 305p/295p  – Open 02/sixteen/21 – Expires 04/01/21 – Max Gain = $100.00 – Open Price = $337.49
(Vertical Balderdash Put Credit Spread)
At Open: Prob. OTM=79.vii%, Caput Room=-9.seven%, Max Loss=$900.00, ROC 11%, 43d Dev = 8.5
Now: Prob. OTM=68.ix%, Head Room=-4.0%, Iv%=30.6%

QQQ: 300p/290p  – Open 02/11/21 – Expires 03/26/21 – Max Gain = $95.00 – Open Cost = $333.57
(Vertical Bull Put Credit Spread)
At Open: Prob. OTM=81.1%, Head Room=-10.1%, Max Loss=$904.00, ROC 10.4%, 43d Dev = 7.9
Now: Prob. OTM=78.1%, Head Room=-5.7%, Four%=30.vi%

QQQ: 295p/285p  – Open 02/05/21 – Expires 03/xix/21 – Max Proceeds = $88.00 – Open Cost = $329.98
(Vertical Bull Put Credit Spread)
At Open up: Prob. OTM=82,5%, Head Room=-10.6%, Max Loss=$911.00, ROC 9.v%, 42d Dev = 6.viii
Now: Prob. OTM=89.2%, Head Room=-7.2%, Iv%=xxx.5%

QQQ: 290p/280p  – Open up 01/26/21 – Expires 03/19/21 – Max Gain = $101.00 – Open up Price = $329.04
(Vertical Balderdash Put Credit Spread)
At Open up: Prob. OTM=81.iii%, Head Room=-11.9%, Max Loss=$898.00, ROC 11.1%, 52d Dev = 7.0
Now: Prob. OTM=92.6%, Head Room=-viii.viii%, 4%=30.5%

Trades Closed This Calendar week

(As of 03/12/2021)

DIA: 290p/280p  – Open 02/09/21 – Expires 03/26/21 – Max Proceeds = $93.00 – Open Price = $313.15
(Vertical Bull Put Credit Spread)
At Open up: Prob. OTM=80.7%, Head Room=-7.four%, Max Loss=$906.00, ROC 10.2%, 45d Dev = 3.7
At Shut: Prob. OTM=96.0%, Head Room=-eleven.3%, IV%=20.viii%, ROR= 8.ix%

Cost to open up: $0.93 premium collected * 100 shares = $93.00
Toll to close: $0.12 premium paid * 100 shares = $12.00
Net Profit= $93.00 to open – $12.00 to close = $81.00 – fees
Actual ROR = $81.00 / $906.00= 8.ix%

This position was airtight 15 days early when the price to close reached 87% of max gain.

Conclusion

This week, the Marketeers took a deep breath equally the Interest and Inflation rates did not rise every bit feared.

Disclaimer

Fifty-fifty though I take tried to get in clear that this blog is my journal, documenting my trek into Options Trading, it has been suggested by others that I, nevertheless, include a general disclaimer. So hither goes…

"This blog and the information contained herein is not intended to be a source of communication or analysis concerning the fabric presented. The information and/or documents contained in the blog practice not establish investment advice."

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Options Trades past Damocles

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Source: https://optionstradesbydamocles.com/2021/03/12/short-strike-assignment-of-credit-spreads/

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