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On an individual basis, you can hedge covered calls overnight by buying the same strike put, resulting in a conversion. No matter what happens in the AM, you won't be hit. However, it's not a very efficient strategy since it racka up a lot of slippage and commissions. You'd need a big edge to...

I think that at higher IV, the back month should exceed the front month.

How will the back month be worth at least $10 plus time value? It's a Jul 50c with XYZ at 50. There's no intrinsic value. Get your hands on a charting program. A picture is worth a 1000 words... maybe even a lot more when trying to describe an option position.

The easiest way to see the R/R is from a graph. I think the CBOE offers one in The Option Toolbox. Plan B: If you can determine the delta of each option at various prices, you can chart it by subtracting the Jul 50c's delta from the Apr 40c. Since the Apr 40c has a higher delta than the...

Jjacks is on to the riight idea and what adjustment you choose would depend on your time frame and outlook. I don't know if you're willing to go out that far but a Sep 10/12 covered call spread (long 24 10's, short 48 12's) would bring in about $750 net premium and would get you out a Sep...

I think a lot of people now have 201 K plans :(

Your position achieves that. Assignment b/t 8 and 9 means that you're giving back some of the premium received. Below $7.97 or so is where add'l loss accrues. Buying the shares back within 30 days as well as buying calls to replace the assigned stock is a wash sale violation. This would...

Are you calling me an alkie???? :)

It's clear from your response that you don't understand the OP's question or his position so I doubt that explaining it further would help you. OK, I can't resist. Suppose he does nothing and the stock keeps sliding down. How does that "help his situation " if the stock "kept sliding...

Well my friend, I think you missed the point of the question. He acknowledged his downside. He's asking about about whether his option adjustments cede the upside potential (which means recovery up to and profit above 15), not about hedging. And if assigned, if so inclined, he can buy back...

The short answer is yes, if you were not assigned early, due to the long call, you would collect the dividend and participate to the upside. The long answer is that up to 15, your participation would be the gain on your extra 145 shares which were purchased with the option proceeds. Above 9...

As pointed out by others, there's no intrinsic involved. Nor will IV stay the same. But if it did, you could simply look at the current option chain to see what the gains would be. If the stock jumped 50 pts, the 150c would be ATM (at the money). If the stock dropped 50 pts, the 50 put...

YES. The implied volatility is the volatility implied by the market price of the option based on an option pricing model. In other words, it is the volatility that yields a theoretical value for the option equal to the current market price of that option.

That's worse than spam. That's ignorance. LOL. Ask the people who wrote CC's at prices 20, 30, or 40 percent higher than today how it worked out for them. LOL. It's a good pitch but it's like a slider that drops like a rock when it crosses the plate. Noobs, beware! :)

With a 3 pt move to 93, there will be no problem closing out the call for 3, regardless of the spread. But given that it's probably just a random example to demonstrate a concept, it can be carried one step further. If one still thinks that there's some upside but wants to lock in some of...

When I'm doing earnings, it's short the IV spike in ratio calendar spreads or strangles in higher probability scenarios where there's more than normal skew b/t the two front months, both are well above HV, and the P&L graph has a good reward to risk ratio. Currently, I don't do any of...

Good point. I don't know enough to know who's doing it ... nor do I really care. But as these programs hit during the day, I shift the bias of my pairs to either more long or more short and scalp the moves. IOW, the cause isn't important to me but recognizing the ebb and flow is. And as the...

Without some really good news in the stock and/or the entire sector to bounce it, maybe it's just a function of JPM coming down hard for the past week on increased volime and running into a lot of resistance as it tries to make its way back up through that?

Hey Mark. I'd put a decimal point with a bunch of zeros next to that "absolutely zero chance of being assigned". It's rare but once in a blue moon stupid money comes into play. 3-4 years ago I had some short MSO calls with 2 points of time premium assigned a month before expiration. Happiest...

I'm glad to read that there's nothing official that I missed. When they implemented the no shorting ban last September it really put a crimp in my trading. And the odd thing is that the market drop accelerated despite their ban.