HIPOS Weekly Update: Happy Time Value!

By Derek Moore

With 2 weeks left in the primary HIPOS trade we wanted to take a second to wish everyone a Happy Time Decay Weekend. Off course we also wish everyone a Happy Easter as well. But good news around this weekend besides the Easter Bunny and chocolate is that with Friday’s market holiday, you will enjoy 3 full days where the market is closed.

While the market isn’t open, your HIPOS position is enjoying time decay. That includes Friday, Saturday, and Sunday. So as your enjoying some jelly beans time value is ticking away. This remember is a benefit since selling volatility sees some time value erode from the premiums each and every day.

Speaking about the trade itself, with underlying market in the Russell 2000 Index holding within a range the spread has now captured around half its targeted profit on an unrealized basis.

Looking at our chart, as the trade has progressed towards expiration day, it also is further away from our sloping purple defensive posture curve. In this pre-holiday blog edition, we’ll keep this short and sweet (think chocolate Easter bunny). Should anything develop we’ll back with an update.

Until then Happy Easter!