SmoothSailing#27

In my endless quest to better inform you about options trading, (and always on the lookout for a way to make money work harder), I’ve been reading up on “Mini Options Indexes”, which are one tenth the size of etf options, ie:, if SPY is at 3000, the SPY mini, XSP, is at 300.  They are still 100 shares per option contract, and they have similar expirations.  The advantage I thought I saw was that they are European assignment, meaning no risk of unexpected assignments before expiration date, and they do not assign stock even when assigned.  Rather, they are cash-settled.  Meaning if you sell a put or a call and it is successful, the difference between your chosen strike and the settled strike is credited to your account.  Not the stock.  Wow, that sounded good to me.

However, once you really figure out how they work, you discover that all is good UNTIL you go underwater.  In that case, rather than being assigned the stock as we are now, they take that same difference, between strike and stock, out of your account in cash.
Well hell, that’s why I quit selling spreads.  I don’t mind owning the stock, I can always wait for it to go up again, but once you lose cash, that’s it. 

So forget that idea.  Once again, like a pinball destined to roll into that one exit at the bottom of the table, I find myself back to what I’m already doing.  There may be easier money out there, but I sure haven’t found it.