In today's Back to Cool, Tony and Katie look to place a new trade in AAPL. Since placing their original Iron Condor, AAPL's IV has expanded, which makes it a prime candidate to sell more premium. Originally looking at a 1 Standard Deviation strangle in January, Tony and Katie ultimately decide on a shorter term, tighter strangle. Under the assumption that volatility will contract quickly, the tighter strangle allows them to collect more premium, but manage the trade more aggressively should it be a winning trade.
Then, Tony walks Katie through her options for RIG and SLV, which are both short ITM naked puts. Since they are essentially carrying stock (100 delta), Tony explains that Katie can short calls to reduce some of the delta/directional risk and then roll RIG to a lower put, thereby reducing her losses. In SLV, since there is very little premium to collect from selling Calls, the team decides to wait it out and see if they are put the stock on assignment, and then sell a call, creating a Covered Call.
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