re: Options Trading Thread

Gotcha. What kind of margin percentage do they allow? You’re with Fidelity, right? I know that TastyWorks offers margin in IRAs. But I don’t know how they’re able to do that. My IRA and HSA accounts with TDA just show buying power and it just equals my available cash in the accounts. So I can’t trade anything but spreads, covered calls and cash covered puts in those. They told me a long time ago that borrowing against tax advantaged accounts wasn’t allowed. Things may have changed, or maybe it’s brokerage specific???

Not many earnings trades left this season that interest me. Went for some short 3/24 puts on NKE at 109 strike (about 10 delta). 44% IV, 56% IV percentile. Earnings announcement after the bell.

Following bayoubengals88 on a SCHW trade in my IRA account: short 53 puts for 3/31. About 16 delta.

And doing the 0DTE SPX ICs for today: 4015c/3930p. I’ve been shooting for 1% total return on these 0DTE SPX trades vs. capital at risk. With the Fed announcement tomorrow, I’ll probably stay on the sidelines. Today has been relatively calm. No desire to potentially get whipsawed tomorrow.

Right. As the market and NKE started moving up around 2:30, I sold some 113 puts too (about 14 delta). In AH, looks like NKE is down only about 50 cents from the close. I’m not able to get on the call from where I am. Must be going OK.

Did you put anything on today?

Is your MSFT trade still alive? You may have mentioned it, but my memory is sort of limited.

Gamma is the rate of change in delta. Gamma is often associated with tail risk. When I sell these 0DTE SPX options, my risk is primarily because of gamma (how fast my deltas can get out of hand).

As for selling a long dated in the money covered call and buying it back when there’s an ‘“inevitable” drop… If the stock runs up even more (since it’s already in the money), there’s not necessarily going to be an inevitable drop that’ll make the option drop below where you sold it - quite the opposite. When an option is in the money, it tends to have more intrinsic value and less extrinsic value. If the stock goes up a dollar, the option will go up at least a dollar. Extrinsic value (because of time, implied volatility, etc.) is where you make your money on long options when the stock just moves toward your strike and you have sufficient time value (represented by theta).

Long winded way of saying, I dunno what he’s talking about. I’d question that poster to give some examples of what he’s talking about. Something he’s actually done and tested. If he does, please share it. I’m curious too.

I closed the MSFT for a profit already

A fellow on TastyTrade said that the PDT had been modified. He wasn’t sure exactly what the changes were. But I ran across this link that speaks to the pattern day trading rule. I haven’t dealt with it, but it sounds pretty harsh. Take a look and I hope that it helps you out.

Pattern Day Trading Rule

I need to learn to ignore fed decisions.
I had a really terrible trade today.
Sold Ford long puts when they were down then Ford tanked and the contracts got to my original price target.

Lost 25% while I could have made 25% had I waited. I feel really dumb.

It was 3/31.
I bought them for an average of .20 and didn't want to see them rapidly drop to .10

Sold at .14 and .15 but they finished at .26!

I’ll take ‘em with a smile and sell more puts later. These are going in an investment account and I’ll slowly build a position for a long term hold. I’m doing the same thing with IBM (good company, great div).

Especially with the integration of Think or Swim, Schwab has a bright future, IMO. I invite the scared rabbits to keep pushing it down so I can buy more, cheaper. Plus, this foolishness is ratcheting up the IV, so I’m getting a nice premium for my short puts.

I’m riding with you on this one, buddy!