We exited the first IO trade today and took a small loss on our SPY calls (just under -5%). Meanwhile, the SPY ETF managed to gain over a point from our entry on 5/5. The options pricing method is so complex (as I know first hand from countless, painstaking cell by cell spreadsheet entries), that rather than try to understand how it’s done, it’s best to just get in the habit of selling while the going is good. Which is exactly what we were able to do with our HG system calls last week on Tuesday’s rise, so we’re evaluating whether IO should take on a similar exit strategy… ah the joys of system development. -MD
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