Opened SCO covered put (7/22 expiration, $187.50 strike)

action

Sold to open 200 shares of SCO for $87.68, and sold to open 2 put contracts with $187.50 strike price expiring 7/22 for $3.10. Total proceeds after commission are $18,138.60, or $90.69/share.

rationale

There’s been a disconnect between the equities market and crude oil over the past couple of weeks. While equities were rallying, crude oil is continuing to languish. I expect that the positive correlation between those will reassert itself. I also expect that the recent dollar strength will start to drain away, as interest rates in Europe start to increase. But, while that is my directional bias, at the end of the day, this trade is about harvesting volatility, and harvesting the inevitable decay of a levered ETF.

July 15, 2016 at 11:27pm · SCO · sell to open · covered put · options


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