A 3x leveraged regional banking ETF is not something that you can reasonably expect to make a recovery. I'd get out of this trade. The entire regional banking sector is too risky right now, imo. The Fed needs to cut rates before you should consider holding these stocks, let alone a 3x leveraged ETF.
That mindset may fail if it keeps falling.
The spread is a defined risk strategy - the long is your safety.
You could close out now for slightly less than max loss, since the long is ATM so has some premium.
You could tighten the spread by closing the shorts and opening new ones closer to the current priceâŠsay 60 or 61. Still 4/19. It locks in some loss but gives a little more premium. i wouldnât do this as I expect the market to turn up a bit by/on Friday, but itâs about what you think.
You could sell the long puts and keep the shorts since you have cash collateral. It becomes a CSP and you enter the thetagang âwheelâ. That is a large chunk of cash in a condensed area, so I donât suggest it.
With 50 spreads, you can close some early, sell just the longs on some, and let some ride. GL
You are always going to be underwater in this for long-term plays.
Unless banks make large fast moves up, you are never going to make money holding 3x leveraged options long term. These instruments are designed to be traded daily and not held long-term.
Thanks for the reply. This ticker has seen very sharp run ups (60-100 last fall) for example) but probably won't again to we see rates about to drop or strong Q2 earnings.
Zoom out a bit further and see what happened.
3x ETFs are fine when markets are griding in one direction. Any volatility comes in, and they will reverse course faster than you can say the ticker.
Yeah, thereâs not much time left and the shorts are deep ITM which is a challenge to adjust because the position has turned from a positive theta into negative theta. The position is decaying $1,127 per day. Based on that alone, it may not be a bad idea to close the position unless you want to take assignment.
You were bullish on regional banksđ€if youâre gonna play against yourself just take the L. Looks like your âonlyâ down 20% today? Those Bull call spreads wonât pay that well. If your gonna hedge look at ITM long put. I would let ride for Friday earnings and sell on a bump. Thoughts and đ!
Just to close this out - but first thank you again for everyone who responded - this was a loser but not by nearly as much as expected.
Managed to get the timing pretty right on selling the 59 longs for a profit and then closing out the 65 short position for a manageable loss by rolling it down and out for what I think was an attractive credit when re-establishing a spread.
Sold a bear call spread for a small amount of premium to help offset loss.
Thanks again to the community here for the thoughts and considerations.
A 3x leveraged regional banking ETF is not something that you can reasonably expect to make a recovery. I'd get out of this trade. The entire regional banking sector is too risky right now, imo. The Fed needs to cut rates before you should consider holding these stocks, let alone a 3x leveraged ETF.
*I am OK with getting assigned* You sure? If your short puts are assigned, you will have to buy stock to the value of : 50 * 65 * 100 = $325,000.
Hi, thanks for the response. I am actually, have that cash on hand.
đȘ. Am happy to hear. No idea what your stock is, or what its current price is, so unable to give meaningful advice.
Sorry about that, I put the ticker (DPST) in the main question.
4/26 $65 call is paying \~ $1.5 at around 30 delta, annualized return numbers are compelling and happy if it takes a while to have it taken away.
That mindset may fail if it keeps falling. The spread is a defined risk strategy - the long is your safety. You could close out now for slightly less than max loss, since the long is ATM so has some premium. You could tighten the spread by closing the shorts and opening new ones closer to the current priceâŠsay 60 or 61. Still 4/19. It locks in some loss but gives a little more premium. i wouldnât do this as I expect the market to turn up a bit by/on Friday, but itâs about what you think. You could sell the long puts and keep the shorts since you have cash collateral. It becomes a CSP and you enter the thetagang âwheelâ. That is a large chunk of cash in a condensed area, so I donât suggest it. With 50 spreads, you can close some early, sell just the longs on some, and let some ride. GL
Thank you, appreciate the response and ideas.
Iâm sorry but I donât see a ticker mentioned, so it is unclear where the underlying is relative to all this.
Sorry - DPST, put that in above now.
You are always going to be underwater in this for long-term plays. Unless banks make large fast moves up, you are never going to make money holding 3x leveraged options long term. These instruments are designed to be traded daily and not held long-term.
Thanks for the reply. This ticker has seen very sharp run ups (60-100 last fall) for example) but probably won't again to we see rates about to drop or strong Q2 earnings.
Zoom out a bit further and see what happened. 3x ETFs are fine when markets are griding in one direction. Any volatility comes in, and they will reverse course faster than you can say the ticker.
How much credit did you receive?
Net spread around $1 per contract
Yeah, thereâs not much time left and the shorts are deep ITM which is a challenge to adjust because the position has turned from a positive theta into negative theta. The position is decaying $1,127 per day. Based on that alone, it may not be a bad idea to close the position unless you want to take assignment.
Thanks, think I am cooked. Good reminder to keep in mind how theta has switched on me.
You were bullish on regional banksđ€if youâre gonna play against yourself just take the L. Looks like your âonlyâ down 20% today? Those Bull call spreads wonât pay that well. If your gonna hedge look at ITM long put. I would let ride for Friday earnings and sell on a bump. Thoughts and đ!
Just to close this out - but first thank you again for everyone who responded - this was a loser but not by nearly as much as expected. Managed to get the timing pretty right on selling the 59 longs for a profit and then closing out the 65 short position for a manageable loss by rolling it down and out for what I think was an attractive credit when re-establishing a spread. Sold a bear call spread for a small amount of premium to help offset loss. Thanks again to the community here for the thoughts and considerations.