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Selling 1 naked put at about 1 STD 8 days out today will reduce the buying power by $1,030 according to Tastyworks:
Buying 1 contract at market now will reduce the buying power by $1,254:
I used the latter for the ROI calc. I'm not sure when I get assigned 1 contract, if the buying power will increase from $1,030 to $1,254. I assume that will happen.
Apologies Mativen. I see there is an additional $1.50 in commissions when opening a trade. I missed it since on the statement it's not shown separately per trade.
No commission on closing the trade.
So, a couple of things happened on Friday the 3rd.
I got assigned 1 MES contract since the price closed below the strike price of the short put with a strike of 4550.
A couple of hours before the close and when it seems very unlikely that price will recover above 4550, I sold the 7 DTE call at the 4650 strike. Why 4650 and not 1 SD out like the puts? The problem is the credit was very low at 1 SD. I therefore chose 4650 in order to get more credit in the range of $50-$60. Similar to the short put up until now. I'n not too concern about it at this stage since overall, the strategy will still be profiable if price rises and close above 4650.
This might become an issue if price continues to fall, but we'll see.
Below is the situation as it stands now. The option contract is showing an unrealized loss of $80 at the time of this post. Will only show the unrealized profit/loss on the futures contract and the realised profit/loss on the option. Just makes it easier.
Going forward, I'll post an update once a week when closing the short call.
In hindsight, made a mistake yesterday. After I was assigned 1 contract at 4550 last week, MES rebound as you might be aware.
When it reached 4600, I decided to sell for a decent profit and also bought back the short call for a $20 loss. Net, the trade made $230. Of course it then went much higher and I missed out on an additional $250.
Anyway, will take note and over time see if this was in fact the correct decision.
I then continued with the strategy and sold a put 10 DTE.