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Message
re: All About OPTIONS - THREAD
Posted on 3/3/22 at 2:38 pm to slackster
Posted on 3/3/22 at 2:38 pm to slackster
quote:
What was the stock selling at when you sold for $155?
What was the stock selling at when you had to buy it at $148?
1- The $155 was the strike. They paid me $155 per share. The Stock had reach a little about $156
2- It was in the $147s
What does that matter?
1
Posted on 3/3/22 at 5:57 pm to Jjdoc
quote:
What does that matter?
We’re talking about selling calls at $155 and selling outs at $147, right?
We’ll if you’re selling a $155 covered call and the stock goes to $165, you’re missing out on that $10. Additionally, if you’re put the stock at $147 but it’s trading at $135 in the open market, you’re overpaying $12. That’s why it matters, at least.
I’m not trying to catch you in a gotcha, I was genuinely curious. However, it seems pretty convenient that your option strike prices and the market price of Apple were a fraction of a percent from one another.
Regardless, a couple of exceptions don’t prove anything.
Buy-write strategies on broad stocks do not outperform buy and hold strategies over any considerable period of time, and research proves it. Look at the CBOE S&P 500 BuyWrite index. Look at the CBOE S&P 500 2% OTM BuyWrite index. Like I said, I’m not really sure how this is debatable.
Posted on 3/3/22 at 7:44 pm to slackster
quote:
We’re talking about selling calls at $155 and selling outs at $147, right?
We are talking selling calls and puts. yes.
quote:
We’ll if you’re selling a $155 covered call and the stock goes to $165, you’re missing out on that $10.
No no.. That's unrealized gains. There are 3 issues with what you are trying to convey.
- That this stock will never go down.
- I'm still not selling puts and therefore you are not accounting for the premiums from those sales.
- The selling of those options from the entry point to the $155.
Combining the first 2 points, I'm going to make money selling the puts. Right now, using your hypothetical, I can sell the $155 put for $60(tomorrow it will be even higher).
quote:
Additionally, if you’re put the stock at $147 but it’s trading at $135 in the open market, you’re overpaying $12. That’s why it matters, at least.
And I believe you purchased FB and the stock prices dropped! The only difference here is I am going to make money selling the calls.
quote:
I’m not trying to catch you in a gotcha, I was genuinely curious.
I'm all for conversations on this topic.
quote:
However, it seems pretty convenient that your option strike prices and the market price of Apple were a fraction of a percent from one another.
LOL! WOW! I tell you what. You can follow my trade on NIO if you want. It's not like I have not posted them.
quote:
Buy-write strategies on broad stocks do not outperform buy and hold strategies over any considerable period of time, and research proves it.
No it doesn't. But you do you.
Posted on 3/3/22 at 8:38 pm to Jjdoc
quote:
No it doesn't. But you do you
Goldman Sachs - As of August 31, 2017, the S&P 500 Index average annual returns for the 1-, 5- and 10-year period were 17.16%, 13.30% and 7.51%, respectively. Buy-Write strategies are represented by the CBOE S&P 500 2% OTM BuyWrite Index. As of August 31, 2017, the CBOE S&P 500 2% OTM BuyWrite Index average annual returns for the 1-, 5- and 10-year period were 15.14%, 8.90% and 6.45%, respectively. Analysis from April 2006 to August 2017, the common inception date of both the S&P 500 Total Return Index and the CBOE S&P 500 2% OTM BuyWrite Index.
Eta- and that says nothing of the tax inefficiencies and transaction costs associated with selling calls and collecting premiums.
This post was edited on 3/3/22 at 8:43 pm
Posted on 3/3/22 at 9:06 pm to slackster
More data, since inception for each covered call strategy:
It’s not even in the ball park.
Like I’ve said, covered call strategies underperform on a broad level, even if jjdoc has it figured out on NIO and AAPL.
It’s not even in the ball park.
Like I’ve said, covered call strategies underperform on a broad level, even if jjdoc has it figured out on NIO and AAPL.
Posted on 3/3/22 at 9:13 pm to slackster
quote:
Like I’ve said, covered call strategies underperform on a broad level, even if jjdoc has it figured out on NIO and AAPL.
You have posted the same crap 5 times. We get it dude.
FWIW, most options traders don't do covered calls on stocks. It takes up too much capital. We do them on options.
Posted on 3/3/22 at 10:02 pm to frogtown
quote:
You have posted the same crap 5 times. We get it dude.
Jj clearly doesn’t.
quote:
FWIW, most options traders don't do covered calls on stocks. It takes up too much capital. We do them on options.
Yeah the really beauty of options is the leverage they provide for your capital, if used appropriately.
Posted on 3/4/22 at 9:26 am to slackster
No Clearly you don't understand.
Today, I closed MORE calls sold because I made 85% of the premium paid to me.
I also sold PUTS on stocks I would hold if the market drops. That means my entry price to a stock under these conditions.... I got paid to enter them.
You don't understand and have no idea that what you are referring to is in a extreme bull market and with people who are not disiplined. ARE WE IN A BULL MARKET? NO!
Today, I closed MORE calls sold because I made 85% of the premium paid to me.
I also sold PUTS on stocks I would hold if the market drops. That means my entry price to a stock under these conditions.... I got paid to enter them.
You don't understand and have no idea that what you are referring to is in a extreme bull market and with people who are not disiplined. ARE WE IN A BULL MARKET? NO!
Posted on 3/19/22 at 2:03 pm to Brobocop
quote:
List of Common Acronyms:
C - Call
P - Put
DTE - Days to Expiration
ITM - In the Money
OTM - Out of the Money
ATM - At the Money
IC - Iron Condor
IV - Implied Volatility
PMCC - Poor Man's Covered Call
SL - Stop Loss
BTO - Buy to Open
STO - Sell to Open
BTC - Buy to Close
STC - Sell to Close
For ease of reference, want to refer to jade lizards (JL) as a form of hybrid strangle/iron condor?
Also, maybe throw in IB for iron butterflies, say STR for strangles and STD for straddles? Your thread, your choice.
Anyway, I have some JLs on FB. 175 short strike on the puts and 235 short strike on the calls. I usually set these up at 40-45 DTE with the aim of closing around 20 DTE, profit target 60% or so. Opening delta typically around 15.
As far as risk on the short put, in this case, I’m content to take an assignment of FB shares at 175, and then selling calls to exit the position in the future - yes, the old tried & true wheel strategy.
Posted on 3/29/22 at 2:03 pm to Brobocop
quote:
What are your main strategies? Are you long premium or short?
I know the question wasn’t directed at me, but I tend to be net short - I prefer to sell options (spreads, strangles, jade lizards, naked, etc.) and collect the premium in high IV environments. As I have time to filter and follow, I do devote a (very) small portion of my portfolio to speculative call or put buying.
Posted on 8/20/22 at 11:01 am to Jag_Warrior
I used a sell to open cash covered put option with a strike price of $8.00 and it closed at $8.00. I know it would have exercised at 7.99 and not filled at 8.01 but not sure what happens at the exact price. Do I own the 100 shares or do I just keep the premium and do not own the stock. Would appreciate info from someone more knowledgeable than myself.
Posted on 8/21/22 at 10:43 pm to jerryc436
I try and close out all options trades before they expire and would advise that unless you are willing to get shares "put" to you or the option exercised. This is never my intention.
I had a long debit spread on the q's several months ago. I don't remember the exact set up but lets assume it was a 310/315 long debit. Well the q's close at like 315.20 or something around there on the Friday of opex and I wasn't able to close it out that day and on the following Monday I had 1k shares of the q's in my account. I called TD ameritrade over the weekend like wtf they should've offset. The guy on the phone just said something along the lines it closed so close to the short call at 315 blah blah blah
Point of this is just close it out. But it may be different with different brokerages and every situation.
Thankfully the market was up like .2% on Monday and I sold immediately lol
I had a long debit spread on the q's several months ago. I don't remember the exact set up but lets assume it was a 310/315 long debit. Well the q's close at like 315.20 or something around there on the Friday of opex and I wasn't able to close it out that day and on the following Monday I had 1k shares of the q's in my account. I called TD ameritrade over the weekend like wtf they should've offset. The guy on the phone just said something along the lines it closed so close to the short call at 315 blah blah blah
Point of this is just close it out. But it may be different with different brokerages and every situation.
Thankfully the market was up like .2% on Monday and I sold immediately lol
This post was edited on 8/21/22 at 10:45 pm
Posted on 8/22/22 at 7:18 am to thatguy777
I am doing my trading in my IRA and did cash covers PUT at 8.00 and was willing to buy 100 shares of AUPH at that price. I am in Vanguard and options that execute normally do so on Saturday morning. It closed at 8.00 on Friday and I thought it would execute. I will wait until later or tomorrow and do another PUT for less than 8 and either buy the shares or keep the premium if it does not execute. I have enough shares and use PUTS and CALLS to reduce price of existing shares for most of these trades. I do not think it filled so I can use that money on another trade. Thanks for your response.
Posted on 8/22/22 at 6:38 pm to jerryc436
quote:
t closed at 8.00 on Friday and I thought it would execute.
As Thatguy777 mentioned, odd things can happen, especially with index options and some ETFs. But under normal circumstances, an “at the money” doesn’t get assigned. Most brokerages abide by the “penny in the money at the closing price” rule. I’m not familiar with Vanguard’s way of doing things, but if you haven’t seen an assignment in your account by now, I seriously doubt that you will.
As a side note, a couple of years ago I had some short puts on AAPL. I was content to buy the stock at the strike, so I let it run through the close. It closed about 10 cents in the money as best I recall. Should have been a guaranteed assignment. But it didn’t. And after hours, it popped up about a dollar. So yeah, odd things do happen from time to time. But normally it’s 1 penny in the money and you get an assignment. At the money (on the money), you don’t.
Posted on 8/22/22 at 6:45 pm to thatguy777
quote:
Thankfully the market was up like .2% on Monday and I sold immediately lol
I know some churches do morning and afternoon services. Which did you attend that following Sunday?
Posted on 8/22/22 at 9:18 pm to Jag_Warrior
Ha. You bet your arse I was sitting at a computer when pre market opened Monday. This is a trading account where I very rarely ever hold stock, its strictly for trading options. And quite frankly I've never had that size position on a single stock or etf, needless to say I was thinking about it all weekend.
I just went back and checked. It was a 355/358 spread and QQQ closed at 358.01 opex day, Feb 4 2022. Sold the following Monday at 358.64.
I just went back and checked. It was a 355/358 spread and QQQ closed at 358.01 opex day, Feb 4 2022. Sold the following Monday at 358.64.
This post was edited on 8/22/22 at 9:31 pm
Posted on 8/23/22 at 1:55 pm to thatguy777
quote:
I just went back and checked. It was a 355/358 spread and QQQ closed at 358.01 opex day, Feb 4 2022. Sold the following Monday at 358.64
That’s one of those weird things that can happen with options (defined risk spreads) at expiration… that’s not supposed to happen. I think it was an SPX trade that almost caught me out awhile back. Shoulda closed, but *thought* that I was safe. Uh uh. So I fully agree that it’s better to close out before expiration unless it’s something you don’t mind getting assigned on.
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