I decided to create a new thread about this topic.
90 days until expiration is too short?
I was thinking along the lines of 12 to 18 months…
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I have not attempted the math given more rapid time decay and the possibility that the draw down happens across a month when you have to roll your option. But the one year option at 30 percent out of the money is 6.44 while a 90 day is 1.05 for the spy.
Since the draw downs happen quickly the ability to catch a major move in a 90 day option is pretty good.
I did have a put on when the Covid crash happened and I messed up because at the time I was rolling the 90 day options every month and I caught the crash, but rolled the option which was stupid. If I would have held that option for one more month …. It went up over 40x. I ended up making a little.
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Oh hard lesson two is when rolling make sure to buy the new one first before selling the old. I had a situation where my option sold but the new option didn’t buy because the price was moving fast.
Probably can do a combination where both have to execute.
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105 for 90 days is cheap vs 644 for one year.
Do you buy 90 day put monthly or rollover 4 times per year? Or every other month? I think with a 90 day option you want to take profits before 60 days?
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I think you mentioned it before… 30 percent out of the money… have you gone lower like 20 or 15 percent out of the money?
The Tail ETF provides a hedge but no chance of asymmetric returns…
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