If I was a long holder of big positions in $AAPL, $AMZN, $TSLA, $FB, $GOOG — any of the teracaps…. I’d be selling way OTM covered calls like a wild man here.#SKEW

— Sean McLaughlin, NLD 📈 (@chicagosean) September 1, 2020

Covered Calls is not a strategy we employ often at All Star Options, as there are better more efficient ways to use our capital to express similar bets.

But for any of you reading this who may be holding legacy long positions in stocks in the biggest names and highest flyers in the universe right now (think “FAANG” stocks, and your TSLA’s and Zoom’s and Peleton’s, etc), we’re seeing an unusual situation where many of these names are exhibiting skew that is resulting in options prices for upside calls being more expensive than downside puts an equal distance away. [Read more…]

As September gets under way, it’s time to review positions with September options that remain open (haven’t already hit profit targets or been stopped out).

Most trades I put on for All Star Options tend to have a minimum duration of 30 days (short premium plays) and often as long as 6-8 months (for long premium plays). As options approach expiration, greeks like theta and gamma start to become my enemy and whipsaw my P/L. Therefore, as options and spreads get into the expiration month, my best practice is to put each position on notice — it’s time to take action.

This month, we only have one position with September options remaining on the books. All the rest have already hit their profit targets or stop loss levels. In the scoreboard below I denote the date we exited each position.

Here’s the scoreboard: [Read more…]