SPY Leaps

Did you have a plan for the market rising? Throw it into optionstrat or similar and see how you feel. Would you make this trade now? If not, dump it. You can sell short duration puts against it. Poor mans covered put.

Your original plan was a quick 1% pullback, but now youre stuck hoping for recovery while theta chips away every day. Selling shorter dated puts against it would offset some decay, but theres a risk the market snaps higher and you get assigned on those, making things worse. Might be worth cutting it before it turns into a bigger loss if the trade doesn't make sense anymore.

Why would you get assigned on puts with the market rising?

What are you talking about? If market snaps higher, it would cost them even more. Maybe you meant buy some?

Oof SPY goes up unless there’s something specific pushing it down, which IMO right now is nothing. Just because it had a decent rise doesn’t mean it will pull back. Sounds like your strategy is hope.

LEAPS are always 1 year minimally for a reason. You just bought ITM calls with rich IV after they rallied towards a local top and than declined and are looking to chop in the short-term. I think you'll be fine as long as you don't get greedy if they rally quickly again past the point the underlying was trading when you first bought the contracts. I'd give it a couple months, but before late Sept is where I'd want to close or roll honestly.

If you wanted it short term why would you pay the excess premium for leaps?

To hedge theta

That's a hell of a lot of theta hedging.

Do you trade long naked options?

if you wanna hedge theta so bad, why not just buy a leveraged inverse SPY ETF and just let it happen over time Not saying that’s a good idea, in my opinion it’s not, but that’s basically what OP is doing except bid/ask spread is gonna be higher and the barrier to entry in terms of capital necessary is higher

You have to hedge theta when buying long naked options…. if you expect a move to happen over 1 month, you never would buy just a 1 month expiration option….

But you also wouldn't buy a LEAP

I only trade spy leaps calls, atm to super far otm. No, i would never buy a leaps put i would just go 0 delta, cash.

I understand the 0 delta but do the atm and far otm leaps get eaten up if the market turns bear?

Yes otm will but they’ll come back. You have to time the market and have strong conviction if you go far otm. Thats the vega hedge is being correct on direction. Theta hedge is picking a way further dte, then just left with delta and gamma.

Gotcha thanks

Exactly

Cheaper ways to do it

Name one. Add a short option? 😂

I don’t mess with options this complicated but I know there’s some spreads that would.  It’d also require monitoring and readjusting a lot.

I don't know - but I do know a guy I've been following for some time recently exited his shares of a security he identified as "UPro", based on SPX. Not shilling anything, I have a couple hundred in SPXW and SPY calls for tmrw and less than $8 cash. He expects a big drop. Running stats and cycles - I think he's wrong, and is getting Taco"d. I fully endorse no FOMO and sticking to your plan. It will dip - the question is what happens before it does - another 3% up first, and then how far down - or just down. I aim to reap SPX, specifically SPXW.

You might be losing a lot of money today sorry to tell you.

You might be too, sorry to tell you.

It’s called you were trying to catch a falling knife. Cut & run is what I’d do but you do you.

Put leaps is genuinely the worst investment I could even think of

Not only that but put leaps on SPY

OP’s probably expecting Iran war to resume full steam ahead.

He might just get his wish.

even if he wanted to, we just don’t have the same level op munitions as we did at the start of the war, when he felt like we could just bomb them indefinitely

Not only that but put leaps on SPY in an AI super cycle

They may lose money, but they’ll do it with respect.

I wouldn’t call them LEAPS since they expire in 7 months. You said you bought them ITM so that means SPY was less than 760 when you bought them, is this correct? If your plan was to sell on a short term pull back then there was no need to get 7 months out. You are exposing yourself to unnecessary vega risk. You are losing $210 for every 1% drop in volatility. Did you have a trading plan if it didn’t go according to plan? If you didn’t then close out the position and have a trading plan when you enter your next trade.

Lots of people still don't know anything under 1 year (some say 1.5 years) expiry is NOT LEAPS. I even saw people calling their 3-4 month contracts LEAPS :)

Maybe he was trying to keep theta decay down even though he was planning on a short holding period.

but y u short when market usually go up....

Hope you learned your lesson

You should have sold put LEAPS at that - that would have made way more sense I feel.

Thank you for your money. Please feel free to buy more put leaps whenever you feel like it

Mid terms are probably going to sink the market. That might be your only good shot.

If dems take control of one or both houses and we reign in the destruction trump is wreaking it should raise the market.

The market seems to enjoy the destruction Trump is wreaking though. Around 58% to 83% of Democrats favor government action or policies aimed at redistributing wealth or reducing economic inequality. What that means is they want to take wealth away from the rich and give it to the working class. I don't think the market is gonna like that. When Kamala lost, the market was happy despite the impending tariff threat, simply because the corporate tax hike threat was eliminated.

You make a good point. The entire country and the financial markets seem locked in some kind of psychosis. Students of history can see that the current trends are not sustainable. The wealth inequality of the late 1920s led to the great depression. It is even greater today. How sustainable is an economy where the majority of people will never be able to afford to own their own housing? How sustainable is a society where people have to forgo medical treatment because the can not afford to pay for the care they may need? The top 1% currently earn over 23% of all income. This is slightly higher than the peak in 1929. The 'golden age' the right loves to look back at had the top 1% earning only 9% of all income in 1970. Current policies want all the goodies we had in the 1950s through 1970s but none of the pain that helped create them. By pain I mean high income tax rates. The big dividing line happened in 1980 when Reagan started the trend of molding big government policy to favor the top decile or quintile of earners. The top 1% currently own well over 75% of the wealth of the nation. This figure is still climbing. If there is not enough income in the bottom 3/4 of the population to generate demand for goods and services how will the overall economy function? ------ I return to your point. You are correct, most people seem pleased. Anectdotally I have spoken to many people who abhor the crass prejudice and racism trump normalizes. They still support him because their IRAs and 401ks are performing well. So maybe you are right.....

nah, divided government is a plus, but there really won’t be an expectation of a significant change in economic policy if dems take the house. Trump still has the right to sign/veto whatever bill gets through both the house and senate. Him being potentially impeached again or house committee investigations happening isn’t gonna change the markets earning expectations very much

Sounds like your thesis isn’t playing out. Is that the exposure you’re still looking for? Cut and run or adjust your Greeks to get the exposure you want.

I only do SPY calls and for puts QQQ is better alternative due to average more downside when it dumps.

Close any position that shows your investment thesis was wrong. Also don’t risk all your cash at once. Or so much that it keeps you up at night.

I would sell immediately. I’m embarrassed to admit I’ve done this myself and I learned the hard way that spy goes up. As time goes on you will need a bigger and bigger pullback to get into the money.

Never bet against the market. However, there will probably be a correction in the coming weeks. Not a recommendation!!!

Should have bought calls or SOLD puts. Long term trend is always up.

Fighting the printing press over the long term is def a losing strategy.

Of all stock/ETF SPY….

$20k on a “SPY probably pulls back 1%” thesis is the part I'd be sweating more than the current -14%. Seven months gives you plenty of time, but don't let the expiration date convince you that the trade has unlimited time to recover.

Sept to november months usually down trends in midterm years. Come back here in that time. And get rid of your option for a gain. Thank me later

There are billions on Spy call leaps... good luck.

The vega comment above is right on the number but backwards on direction for your thesis. You are long a put hoping for a selloff, and selloffs come with an IV spike, so in the exact scenario you are betting on, the vega works for you, not against you. A 10 to 15 vol point pop in a real drawdown stacks premium on top of the delta gain. What actually kills this position is the grind. If SPY just drifts up with no vol, you lose on delta, theta, and vega at the same time because IV bleeds lower into the melt up. So this is really a bet on volatility showing up on a timetable, not a directional bet, and 7 months of ITM extrinsic is an expensive way to hold that. If the view was a short term pullback, a shorter dated put closer to ATM or a put debit spread gets you most of the delta while cutting the theta and vega you are paying for now. The single long ITM leg is the one structure that makes you pay for all three.

Definitely hold. Many, many indicators suggesting that the market is running on fumes. A better approach would have been to have a large cash allocation to buy in when the failure happens (Buffett). Since you are already in for $20k and down three I would just hold for at least a 25% dip. Could take a while and you could be down a lot more, say $10k. I would hold

I say wait until midterms and then cash out if you remain ITM 😂

Just close it and forget about it. Stop buying puts on SPY.