Model Portfolio Change

After yesterday’s drop I have added a position to the model portfolio. $3,000 worth of SPY April 15 2016 calls at a strike of $203. Check the model portfolio page at the menu bar.

There is no reason for stocks to fall so hard now, as the money supply is expanding rapidly. This will be reversed in a few days, if not today and we should be able to sell the calls for a quick profit sometime in late January or early February.

The reason I picked the $203 strike is that it has the least open interest in near the money contracts, meaning the lowest amount of people trading it. That generally gives it a discount over other strikes as the demand is lowest.

I always go out a little farther than I plan to sell them in case my timing is off. It’s worth it to pay the extra time premium rather than rely on impeccable timing which I almost never have.

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