Aug 20, 2013
Option Block 269: Listener Questions a Go-Go
Trading Block: Another down day on the markets. The 3-year and 10-year are bumping up against levels we haven't seen in a while.
Mail Block: Your questions, our answers
- Question from Lee Patterson - I've been an Option Block listener for a few months and you've inspired me to hedge my retirement plan through my employer. It has been 100% invested in the S&P 500 and unfortunately I cannot use options in this account. My idea is to go to cash in my retirement plan at work while buying 3 month at the money calls in SPY and rolling them when they are 1 month from expiration in my Roth account. To finance these I would sell the weekly SPY about 2-3% out of the money. Does this seem like a reasonable plan to participate in the upside while limiting losses or is there a better way? Thanks for your time. Lee
- Question from @Metegia - Which direction is a Risk Reversal, which is short RR? Descriptions conflict. Thanks.
- Question from A. Jackson - Andrew referenced "double butterflies" on a recent episode of the Option Block. Can you explain a little more about that position - how it differs from regular fly, when/why you'd want to use it, strike selection, etc. Thank you very much Mark for making so much excellent options content freely available to everyone. Your network is certainly one-of-a-kind and I'm glad to see that it is doing so well.
- Question from Richard D. - Hello! In this episode there is a discussion on taking advantage of TSLA skew and using OTM TSLA butterflies on both sides at strike. Could you explain a little more about skew, and if long/short butterflies are best given skew?
Around the Block: FOMC minutes. Keeping an eye on the 3-year and 10-year.