EIP Q&A 1
How many of this EIP strategy do you foresee we will do per year?
We'll go for one per month as the market conditions allow.
What are the criteria for scaling out ?
Great question. Depending where underlying is, relative to open flys. If it’s between tier 1 and tier 3 then we close ‘outside’ flys. If it’s above all tiers then we close starting with tier 1 and vise versa.
What happens when the market jumps higher faster than you can respond?
If the underlying gaps higher and runs away, we should look to add tiers 2 and 3 according to plan. We want price to be ahead of our short strikes, this way WHEN/IF underlying reverts the short strikes (that we sold) will have less time premium due to decay and we’ll have a profitable trade.