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re: Can you sell calls to establish a short position?
Posted on 7/12/16 at 8:03 am to CajunTiger92
Posted on 7/12/16 at 8:03 am to CajunTiger92
We're going to start today, day two of the proposed trade, down almost 50%, with SPY premarket up another .5%.
We're assuming the trade is still alive, based on yesterday's open and close, but that's a stretch as yesterday during trading the premium got as high as $1.30, against premium sold for about .89, which is extremely generous as the option actually was under .30 on Friday. But we're trying to give every benefit of doubt that the trade is still ongoing, and hasn't been blown up. Yet.
So the easiest thing to do is look at open and close, but that's not even close to what one would need to do on a naked call. This would presuppose the option doesn't get exercised during the day, which when you have a spread between premium collect and current premium such as we had intraday yesterday, this could have very well been exercised already.
My credit spread for the same short position by the way would be down only marginally, and the maximum loss is still capped at $2,500. But we're not close to there yet. On the proposed trade, we have an entirely different set of circumstances, and so far on day two, it's not looking very good.
We're assuming the trade is still alive, based on yesterday's open and close, but that's a stretch as yesterday during trading the premium got as high as $1.30, against premium sold for about .89, which is extremely generous as the option actually was under .30 on Friday. But we're trying to give every benefit of doubt that the trade is still ongoing, and hasn't been blown up. Yet.
So the easiest thing to do is look at open and close, but that's not even close to what one would need to do on a naked call. This would presuppose the option doesn't get exercised during the day, which when you have a spread between premium collect and current premium such as we had intraday yesterday, this could have very well been exercised already.
My credit spread for the same short position by the way would be down only marginally, and the maximum loss is still capped at $2,500. But we're not close to there yet. On the proposed trade, we have an entirely different set of circumstances, and so far on day two, it's not looking very good.
1
Posted on 7/12/16 at 8:24 am to Iowa Golfer
dude the trade is not down 50%, you're ridiculous at this point. I was traveling yesterday so I didn't get to sell them but if you sold SPY 214 calls for whatever .25 your trade is down yes if you choose to close it. Im talking about taking the 500 shares short and holding them, are you listening at all? I dont care about all your mumbo jumbo about buying $500 of puts or whatever. I dont want to buy puts bc those can go to $0. If I get short the SPY at 214 and hold it. Even if by some chance the SPY rips to 220 thats a 3% loss. At this point the upside on the SPY is under 5% and the downside is way way bigger.
Can you pay attention at all to what I said multiple times in this thread, I want to establish a market short position, this isnt a trade. I was asking if selling calls would let me establish said position $1 higher or if I shouldve waited for that 214 which was new ATH levels. All I asked was if selling calls at 214 while we were at 213 would allow me to get short much like selling puts at lower levels lets you get long
Nobody is down 50% if you get assigned a short and hold it through the september FOMC along with the continuing deterioration of economic data over the next 24 months.
Can you pay attention at all to what I said multiple times in this thread, I want to establish a market short position, this isnt a trade. I was asking if selling calls would let me establish said position $1 higher or if I shouldve waited for that 214 which was new ATH levels. All I asked was if selling calls at 214 while we were at 213 would allow me to get short much like selling puts at lower levels lets you get long
Nobody is down 50% if you get assigned a short and hold it through the september FOMC along with the continuing deterioration of economic data over the next 24 months.
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