re: Options Trading Thread

quote:

---

Ticker is SQQQ.
- Pays a 9% divi
- it's at a low because the market is up. It goes higher as the market drops.
- Total cost per share, $10.50

---

You need to learn about contango. Google it.

quote:

---

I lean towards the first option due to the divi. It pays out $1.04 per year on a semi annual basis.

---

That’s not how SQQQ works. You should look into the “dividend” before going that route.

Fair enough.

Purchasing/selling options on top of a 3x leveraged QQQ ETF just inherently seems like a bad idea to me, but if you understand how SQQQ works, good luck.

ETA - it feels like the financial equivalent of a martingale system.

quote:

---

Fair enough.

Purchasing/selling options on top of a 3x leveraged QQQ ETF just inherently seems like a bad idea to me, but if you understand how SQQQ works, good luck.

---

I've done it with TQQQ. Purchased at around $24. Sold calls on it.

I'm looking for push back on it. Always want to know the downside.

quote:

---

With the VIX being in the 12s, it’s difficult for me to do my “normal” trades without having to get too close to the flame, and my guidelines would force me to only use a small percentage of capital - not worth the risk. It’s put me on the sidelines as far as shorting index options this week. Pretty much all I’ve done is sell some contracts on earnings plays in my investment accounts (nothing in the trading account since last week). 15 delta WMT short puts printed nicely today.

If anything, with dirt cheap premiums, now would likely be a crossover point that could justify being net long or putting on debit trades.

---

It's always a great feeling knowing that even when your wheelhouse is not working as well as you want, you have the knowledge to make it in other ways.

Personally, I really do enjoy our conversations here and thank you for taking the time to help others with what your forte' is.

To keep digging at this downside vs upside, here is an article I would like for you guys to counter when/if you have the time.


LINK


Leveraged ETFs: The Data Says We're Missing Out



- Long-term investors can expect to outperform broad market indexes when using leveraged ETFs so long as the overall leverage level of their portfolio is modest and they rebalance daily

- Hedge funds and trading firms can exploit specific nuances of these products that may not be correctly priced by the market



But from my experience on holding TQQQ, I don't see the horror to holding it long term. I purchased at the time the market was rebound and held the shares into the 50s while selling calls. My returns were great. In Jan 2023 it was $17 while SQQQ at $52. It's now reversed. SQQQ is at $10 while TQQQ is at $63.

I liquidated enough of my TQQQ to make my investment back plus profit. I do believe that markets go up, then they go down. Unforeseen events happen all the time.

My thoughts are that we are at an all time high with the market breaking 40K today. (which is why I am considering this) At some point it will drop. Not wishing for it, it may be 1 or 2 years, but it will pull back.

PMCC on RDDT. 2 years out.

Well, holding TQQQ long term is much much better than holding SQQQ long term. The issue with is ther TQQQ rebalances daily, and with 3x leverage, it has to borrow at 2x the Fed funds rate (roughly) to achieve its intention. During ZIRP that was fine, now it's like 10% in interest. That materiallly affects the risk reward profile of it.

Sold a 6/3 526c AND a 521c (that I bought at the bottom today) for a combined 60 dollar loss

Did not expect a 6 dollar price increase in the last hour of the day after the blood red morning.

Anyone else severely frick spy options today?

That 521C is going for 6.57 atm