Monday’s Action On Premium Selling

This entry is part of the Premium Selling Strategy that is logged on the linked page.

Today was a busy day for me. I am somebody who likes take advantage of strong down days to initiate some type of position. And when selling puts on indicies down days are working days. Today I did two things; sold ES Put Premium, and sold VXX call premium.

First lets look at todays market action:

20110314marketaction

During those moments where the market was bleeding red I decided to jump into the market since the put premium and vix premium would be highest.

In my real account I sold 1110-1060 puts for 1.25 (62.50 USD) premium per contract. For the paper account I sold two naked ES 1125 Puts for 3.60 (180.00 USD) for a grand total of 360.00 USD. Adding that to Friday’s net premium of 3,075.00 USD we have a current grand total of 3,435.00 premium.

The second play that I did was sell VXX calls. Selling VXX calls is one of my favourite money maker plays because it is a given that mean reversion will force the VIX down. Add in the fact that the VXX bleeds correlation to the VIX and the sure money is on selling calls.

For both the real and paper account I sold 44’s April VXX calls. For the paper account I sold the following (basically identical to my real trades plus or minus a bit).  I sold 5 VXX calls for 0.67 each for a net premium gain of 335.00 USD, and adding that to the running total I am currently netting 3,770.00 USD for the April cycle. Thus far I am using 66,000 of my margin, and I still have available 178,000 USD of margin. Plenty of room if I need to double down roll.

Posted in General Trading