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re: All About OPTIONS - THREAD
Posted on 12/8/21 at 9:57 am to Brobocop
Posted on 12/8/21 at 9:57 am to Brobocop
In honor of this thread, I got approved for options trading today after applying last night. 14 years of investing, never traded an option. I will be back for advice and strategy, going to start very small.
I watched a couple of your video links last night, that one YouTube video with the bald guy was amazingly done.thamks for consolidating some information. My main desire to learn options has always been to hedge positions without selling them, you gave me the nudge to finally learn how to do it.
I watched a couple of your video links last night, that one YouTube video with the bald guy was amazingly done.thamks for consolidating some information. My main desire to learn options has always been to hedge positions without selling them, you gave me the nudge to finally learn how to do it.
This post was edited on 12/8/21 at 9:58 am
2
Posted on 12/8/21 at 10:43 am to Pendulum
Welcome, sir!
quote:
going to start very small.
This is honestly the most important thing.
Stay. Small.
To me, options is about a bunch of small, high-probability, trades over and over again over time.
You minimize your losses in an outlier market move by staying small.
The best analogy I have is the casino:
The casino is successful because they have a higher probability of profit than the one's gambling.
While some patrons of the casino may hit it big from time to time, no one has ever made a career at the roulette table.
The casino keeps the lights on from a bunch of small wins time after time.
Posted on 12/8/21 at 3:06 pm to Brobocop
quote:
TRADE ALERT:
For what it's worth, I think today trades sideways (+/- $15 either way on the SPX).
I ran a 0 DTE IC $5 wide spread for a $1.20 cr. $4650/$4655P $4720/$4725.
20ish Delta.
This is purely a scalp play. I'm looking to take profits on this around 40% of MP.
Update: All out for a $50 winner.
$SPX Closed at $4701.22, and the trade expires worthless for max profit.
Posted on 12/8/21 at 6:00 pm to makersmark1
I stick to covered calls and cash secured puts.
I sell calls when the strike price and premium make it where I would be ok with a market order at that price.
For the puts, I sell at a strike that I would be ok with entering a position in the stock.
In my experience, about 75% of options expire worthless.
I guess going long a call option could be extremely profitable IF you are right.
Owning puts may be wise IF one stock represents a large portion of you net worth. It would serve as insurance against a massive downside move.
I sell calls when the strike price and premium make it where I would be ok with a market order at that price.
For the puts, I sell at a strike that I would be ok with entering a position in the stock.
In my experience, about 75% of options expire worthless.
I guess going long a call option could be extremely profitable IF you are right.
Owning puts may be wise IF one stock represents a large portion of you net worth. It would serve as insurance against a massive downside move.
Posted on 12/8/21 at 9:37 pm to makersmark1
quote:
I guess going long a call option could be extremely profitable IF you are right.
There’s load of data on this.
Buying a call ATM has about a 38% probability of profit. The potential profit is substantial, however, the odds are not in your favor.
Posted on 12/8/21 at 10:20 pm to Brobocop
Are those odds based on a snapshot of the market at any given time and buying an ATM call on every stock in the sp500? Also, is that holding to expiry?
Look for the best setups in a good market environment and I don’t think you get those odds. Also, exiting when a stock breaks key levels is another part of the equation.
Look for the best setups in a good market environment and I don’t think you get those odds. Also, exiting when a stock breaks key levels is another part of the equation.
Posted on 12/8/21 at 10:58 pm to Brobocop
I’m here for it all
Posted on 12/8/21 at 11:34 pm to thatguy777
Yeah it’s the probability of a buyer making at least $0.01 at expiration.
I’m fairly certain that goes for all options across the board Since all options are priced based on Black-Scholes
I’m fairly certain that goes for all options across the board Since all options are priced based on Black-Scholes
Posted on 12/8/21 at 11:40 pm to Brobocop
When you say buying an ATM call has a 38% probability of profit, what kind of profit are we talking about -- 25%, 50%, 200%, or just any profit?
Posted on 12/9/21 at 6:51 am to tigerfan4444
quote:
When you say buying an ATM call has a 38% probability of profit, what kind of profit are we talking about -- 25%, 50%, 200%, or just any profit?
Any profit, yes.
It makes sense if you think about it high level.
Buying stock, has a 50% chance at profit (stock can either go up, or go down).
When you buy an option, the premium you pay skews your odds. In order to make a profit, the stock can’t just “go up”. The stock must go up higher than the premium you paid.
Posted on 12/9/21 at 5:35 pm to Brobocop
I like swing trading a position from a day to a week, depending on the price action and results.
When IV is higher like the last few weeks I pick a direction I like and buy near the money options with 14+ DTE. I then hedge with cheap 2 to 7 DTE OTM options. Then add or roll positions as needed at peaks and troughs. You don't want the price to stay flat.
When IV is higher like the last few weeks I pick a direction I like and buy near the money options with 14+ DTE. I then hedge with cheap 2 to 7 DTE OTM options. Then add or roll positions as needed at peaks and troughs. You don't want the price to stay flat.
Posted on 12/9/21 at 6:19 pm to makersmark1
quote:Checking in.
Owning puts may be wise IF one stock represents a large portion of you net worth. It would serve as insurance against a massive downside move.
Posted on 12/9/21 at 10:01 pm to bayoubengals88
I rarely do options and if I do they are long calls or crash puts. Passive income can be generated if people have the capital and the experience, but that’s not me.
Posted on 12/10/21 at 5:44 am to jangalang
This is just my opinion as an investor who does not trade daily.
Options are a diminishing time limited asset.
I stick to the sell side.
A large percentage of options expire worthless.
I have a large number of cash secured puts expiring in January 2022.
I may have to buy the underlying shares on one position.
I’ll sell some more puts and generate premium on stocks I would enter at the strike.
It is not sexy like buying a long call and getting a big upward movement in the stock, but it generates premium, and reduces my entry price if assigned.
Of course if the stock goes way down, it is a big loss. I’ve had a couple do that.
Options are a diminishing time limited asset.
I stick to the sell side.
A large percentage of options expire worthless.
I have a large number of cash secured puts expiring in January 2022.
I may have to buy the underlying shares on one position.
I’ll sell some more puts and generate premium on stocks I would enter at the strike.
It is not sexy like buying a long call and getting a big upward movement in the stock, but it generates premium, and reduces my entry price if assigned.
Of course if the stock goes way down, it is a big loss. I’ve had a couple do that.
Posted on 12/10/21 at 10:59 am to Brobocop
Good thread
Wondering if there is an app that anyone recommends to give good option strategies.?
Wondering if there is an app that anyone recommends to give good option strategies.?
Posted on 12/10/21 at 1:20 pm to Brobocop
Is there data showing the probability of making a profit if bought and sold before expiration?
If I hold an option until expiration, then I couldn't unload it for anything to minimize my loss and/or the cost with commissions would have been greater than the price I could get for selling it.
My goal is to never hold any option position through expiration.
If I hold an option until expiration, then I couldn't unload it for anything to minimize my loss and/or the cost with commissions would have been greater than the price I could get for selling it.
My goal is to never hold any option position through expiration.
Posted on 12/11/21 at 9:51 am to Brobocop
I current have iron condors placed on LULU, FB.
I sold call spreads on SQ, ARKK.
Also have a sold put spread on FB
All expiring in January. Tend to target 30 deltas
I sold call spreads on SQ, ARKK.
Also have a sold put spread on FB
All expiring in January. Tend to target 30 deltas
Posted on 12/11/21 at 9:51 am to SlidellCajun
Trade Machine by CML. It’s expensive though.
Posted on 12/12/21 at 3:25 pm to LSUtoOmaha
Sounds like quite a few of us using the sell side of options...and conservatively, the covered or secured side. Also known as the wheel strategy. A good resource that got me started with the wheel is:
Blue Collar Investor
Allan has youtube and podcasts as well as books. Also has subscription service that recommends trades. You can watch and listen for free so I recommend that.
Someone mentioned UPST. Is good example this year of volatile stock that can generate high option premium.
Blue Collar Investor
Allan has youtube and podcasts as well as books. Also has subscription service that recommends trades. You can watch and listen for free so I recommend that.
Someone mentioned UPST. Is good example this year of volatile stock that can generate high option premium.
Posted on 12/14/21 at 9:20 am to Brobocop
LEAPS as a leveraged investment...
If the market does pullback in Q1 15-20% like everyone is speculating, when I "buy the dip", considering just buying leaps instead of shares. Better leverage. I could then sell calls against the leaps (PMCC).
My question is typically in a PMCC you are buying deep ITM with .9 delta so that way if your shot position is challenged, your long position moves in line with stock and you can close the entire spread.
I was considering going 10% OTM here instead which would put me at around .45 delta. I would then just hold pat until my delta rose closer to .8 then start selling CCs.
Thoughts?
If the market does pullback in Q1 15-20% like everyone is speculating, when I "buy the dip", considering just buying leaps instead of shares. Better leverage. I could then sell calls against the leaps (PMCC).
My question is typically in a PMCC you are buying deep ITM with .9 delta so that way if your shot position is challenged, your long position moves in line with stock and you can close the entire spread.
I was considering going 10% OTM here instead which would put me at around .45 delta. I would then just hold pat until my delta rose closer to .8 then start selling CCs.
Thoughts?
This post was edited on 12/14/21 at 9:30 am
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