A case study of how option premiums are priced.

Motive

This is a case study on how the option prices vary as we approach the date of expiry. In particular this post aims to see how the options with farther away expiry date perform compared to the options with earlier expiry date. This data is not freely available online, hence the need for this particular analysis.

March 17th

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The beginning of my Robinhood journey

So here's the plan I'm going to document my weekly progress with Robinhood. My primary way to do this is going to be Put Debit Spreads, Call Debit Spreads, Naked Calls and Puts, the latter sparingly used. I'll also do my best to deposit $5000 on the 1st of each month. I bought 2 Call Debit Spreads this week. Let's see how they do. SPY CDS expiring tomorrow. If SPY closes above $391 then I get $300. I risked $285 for $300. Lucid Motors CDS which went public through CCIV SPAC is expiring this Friday. If the price of CCIV is above $30.5 at close on Friday, then I get $1000. So this means that I'm risking $560 to gain $1000 which is 44% return. Pretty sweet. I'll also be posting daily/weekly updates.

Fed to keep near zero interest rates till 2023 to boost recovery, forecasting a bullish outlook in the near team.

Jerome Powell gave an update today on the Federal Reserve's position on the interest rates for the foreseeable future. The forecast of near zero rates till 2023 calmed the nerves of investors and led to a sharp drop in the market volatility index VIX (source: yahoo finance ) Tech stocks look to bounce in the coming weeks in light of this news.

Robinhood Chronicles

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