HIPOS Conservative Update: All According to Plan

By Derek Moore

February 3, 2023

HIPOS Conservative Expires Successfully for Full Profit

Today marks expiration day for the short put spread on within our HIPOS conservative strategy.

The S&P 500 Index as outlined above never moved against the position once the initial seasoning period passed. As time passed, the market continued higher putting more distance between both the short 3200 strike and the purple curved line.

This would be where the ZEGA team might take a more defensive posture.

How is Full Profit Defined in HIPOS Conservative?

As sellers of volatility, we take in premium by selling a spread position.

That premium is our potential profit. If we get to expiration day and it expires at zero, we’ve captured all of our profit target. There are times where we might close or roll the trade early, but in most instances of HIPOS we let it run its course.

Typically, there is a trade each month as part of our systematic long-term approach to selling volatility.

When Will the Next Trade Be Put On?

As soon as the team finds a trade that meets our strict criteria for entry.

This involves looking at both the short call spreads and short put spreads on each side of the market. We also look at how many days and the requisite return needed against our normal risk parameters. While volatility has subsided of late, it still remains elevated compared to the averages the last 10 years or so.

We will be back to update you all when a new position is put on.

Until then, enjoy the weekend and we’ll be back soon.