HiPOS Update: Benefits of Price and Time - Jay Back on Cheddar TV

By Derek Moore

HiPOS Conservative Near Expiration

As we move toward the latter part of our current HiPOS Conservative trade, we currently are sitting at almost a full unrealized profit.

This is due in large part to the underlying S&P 500 Index price sitting more than 23% above the out of the money 3550 short put strike. Time value is kicking in as we wane down the number of days remaining until expiration on December 29th. As you can see in our typical HiPOS graph, thus far the market never threatened our short strike in a material way.

With the market holiday on Christmas Eve and regular weekend, that leaves only 5 trading days remaining.

Moving forward towards expiration day baring an unexpected huge move in the S&P 500, you and your clients should not expect much change in the remaining value of the spreads through expiration.

As we’ve previously commented, if our traders found another trade to roll into given the cost to close out the current one, they would explore that.

Typically, though there is some remaining value in the spreads that simply does not disappear until the contracts expire and are removed from the account. Given that volatility has remained elevated, we anticipate being able to roll into a new trade soon after expiration.

We’ll be back with an update should any changes occur or when we move to another new position in accounts.

Jay Pestrichelli Guests on Cheddar TV Market Open Show

After yesterday’s CNBC stint, Jay helped provide market context on Cheddar’s business network.

Key themes discussed included expectations for supply chains post-holiday rush and whether this latest round of Covid news causes any longer-term impact in markets.

Jay also touched on ways to hedge positions given inflation fears and increased market volatility premiums we are seeing in the equity markets.  Of course, the Fed and interest rates came up as well.