With two shortened market weeks in a row for Christmas and New Year's, I probably won't be doing a ton here, but figured I'd do a post for how exchange-traded funds are looking in the waning weeks of 2020 ... .
EXCHANGE-TRADED FUNDS ORDERED BY PERCENTAGE THE AT-THE-MONEY SHORT STRADDLE NEAREST 45 DAYS IS PAYING AS A FUNCTION OF STOCK PRICE:
SLV (32/46/11.9%)
GDX (18/43/11.0%)
XLE (25/42/10.7%)
EWZ (14/40/10.0%)
XBI (21/36/9.1%)
KRE (18/36/9.3%)
I'm currently in small XLE, EWZ, KRE, and GLD positions, but will consider adding on weakness if any comes my way and the implied volatility sticks in there. One thing I don't want to do is to constantly follow high implied volatility, only to find myself grossly overweighted in energy, Brazil, and regional banks, however, so don't want to go too crazy adding in sectors that have been high in the list week in and week out over the past several months.
BROAD MARKET:
IWM (22/29/6.9%)
QQQ (19/26/6.5%)
SPY (13/22/4.9%)
Pictured here is an SPX 50 wide set up to pay at least 10% of the width of the spread, or around 5.00/contract in the expiry nearest 45 days, which would be the February 5th weekly (currently 47 days until expiry). I would ordinarily opt for a higher implied volatility RUT setup, but there currently isn't a February 5th expiry available. You can certainly go with the January 29th (40 days) or the February 19th (59 days), with the preference being to put these on in a down day or days. Smaller account should consider going with SPY or QQQ spreads* with the appropriate combination of of contracts and spread widths commensurate with your account size.
BOND FUNDS:
TLT (1/15/3.5%) (1.609% Yield)
EMB (11/8/2.6%) (4.024% Yield)
HYG (7/10/2.1%) (4.917% Yield)
AGG (29/9/1.9%) (2.252% Yield)
In the IRA, I've been selling HYG short put here of 30 days' duration or so for a credit that is around the monthly dividend. With the December 18th short put having expired worthless, I'll look at adding some in the January 22nd cycle, where the 85 is paying .41 at the mid. As I've pointed out before, the premium in bond funds generally stinks, but I've been using this strategy as a way to deploy buying power that would otherwise be sitting there earning virtually nothing while I await down days or a higher volatility environment.
* -- Unfortunately, NDX isn't as liquid as either SPX or RUT, so I virtually never trade NDX spreads, opting instead for equivalent sizing in the QQQ's (e.g., 5 10-wides).
EXCHANGE-TRADED FUNDS ORDERED BY PERCENTAGE THE AT-THE-MONEY SHORT STRADDLE NEAREST 45 DAYS IS PAYING AS A FUNCTION OF STOCK PRICE:
SLV (32/46/11.9%)
GDX (18/43/11.0%)
XLE (25/42/10.7%)
EWZ (14/40/10.0%)
XBI (21/36/9.1%)
KRE (18/36/9.3%)
I'm currently in small XLE, EWZ, KRE, and GLD positions, but will consider adding on weakness if any comes my way and the implied volatility sticks in there. One thing I don't want to do is to constantly follow high implied volatility, only to find myself grossly overweighted in energy, Brazil, and regional banks, however, so don't want to go too crazy adding in sectors that have been high in the list week in and week out over the past several months.
BROAD MARKET:
IWM (22/29/6.9%)
QQQ (19/26/6.5%)
SPY (13/22/4.9%)
Pictured here is an SPX 50 wide set up to pay at least 10% of the width of the spread, or around 5.00/contract in the expiry nearest 45 days, which would be the February 5th weekly (currently 47 days until expiry). I would ordinarily opt for a higher implied volatility RUT setup, but there currently isn't a February 5th expiry available. You can certainly go with the January 29th (40 days) or the February 19th (59 days), with the preference being to put these on in a down day or days. Smaller account should consider going with SPY or QQQ spreads* with the appropriate combination of of contracts and spread widths commensurate with your account size.
BOND FUNDS:
TLT (1/15/3.5%) (1.609% Yield)
EMB (11/8/2.6%) (4.024% Yield)
HYG (7/10/2.1%) (4.917% Yield)
AGG (29/9/1.9%) (2.252% Yield)
In the IRA, I've been selling HYG short put here of 30 days' duration or so for a credit that is around the monthly dividend. With the December 18th short put having expired worthless, I'll look at adding some in the January 22nd cycle, where the 85 is paying .41 at the mid. As I've pointed out before, the premium in bond funds generally stinks, but I've been using this strategy as a way to deploy buying power that would otherwise be sitting there earning virtually nothing while I await down days or a higher volatility environment.
* -- Unfortunately, NDX isn't as liquid as either SPX or RUT, so I virtually never trade NDX spreads, opting instead for equivalent sizing in the QQQ's (e.g., 5 10-wides).
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The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.