Buy
IWM via selling Feb 78 puts @86.6
I
continue to edge into the stock market by selling 90% probability
puts on the Russell 2000 ETF. There is a 90% chance that the puts will expire
worthless if held until expiration. It seems difficult to imagine a
scenario where the stock market gives up all its gains from the
November 2012 lows. It could happen, but historically, less than a
10% chance.
This
trade feels uncomfortable. Some recent trades moved against me
quickly, so it feels like I have a cold hand. I remind myself that I
came into the year, way under exposed to the stock market, so even if
on the 10% that some of these puts come into play, getting assigned
stock on a sharp pullback wouldn't be the worst thing.
Long
APC BA GPS IWM LGF UNP XRT
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