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In the Yale Endowment portfolio, we currently own the SPY January 17, 2025, 345 call LEAPS contract at $98.00. You must own LEAPS in order to use this strategy.
There is little to no value left in our XLU December 15, 2023, 56 puts. As a result, I’m going to buy them back, lock in profits and immediately sell more premium. I’ll be doing the same in a few other positions as we move throughout the week.
We have the opportunity to sell premium one more time before we close out our position for 2023.
We have two open positions, both bear call spreads, with the intent of opening up another position this week. My hope is to add a bull put spread or iron condor to the mix, but with implied volatility (IV) mostly low across the board due to extreme short-term overbought conditions, our opportunities, at least at the moment, are limited. I’ve been looking at a few potential volatility plays based purely on IV increasing over the next few months. I’ve also been looking at a few stocks that have IV around the 30% to 35% mark, if not higher. Ultimately, I want to balance out our deltas, as we don’t want to lean too heavily in one direction. At the moment, our deltas are leaning to the short side, so we hope to balance those out a bit as the week progresses.
As we move into the month of December all of our positions continue to thrive. Even if we see a pullback over the next month, unless it’s sharp, we should see some nice gains as we progress through the month. I also hope to add another trade to the portfolio, but I would like to see a reprieve before I sell a few puts. Implied volatility is currently quite low across the board and the market sits in an extreme short-term overbought state.
We have officially entered the earnings doldrums, but that certainly doesn’t mean that opportunities won’t present themselves. For instance, this week Lululemon (LULU) announces earnings and offers a decent opportunity for an iron condor. I’ve gone over a detailed iron condor example in the “Weekly Trade Ideas” section below.
The bulls once again pushed the market higher last week as the S&P 500 gained 0.77%, the Dow was the big winner with a rally of 2.42%, and the Nasdaq rose marginally by 0.38%.
In the Buffett’s Patient Investor portfolio, we currently own the TXN January 17, 2025, 135 call LEAPS contract at $53.05. You must own LEAPS in order to use this strategy.