fix: in OP I wrongly wrote that ExpDate is Jan-2022, of course Jan-2023 is meant 
A trade went bad, kind of... :-)
- Thread starter earth_imperator
- Start date
Being short vol in this environment without a hedge of some kind is begging to be sent to trader heaven. Please sweet baby infant Jesus take a break from naked options until you have a bit more of a handle on them.This is a new EV car company attempting to begin its first production line within weeks, so was my analysis then. Then the company said they need to raise some more capital, and the production was delayed. This bad news caused the crash of the stock... :-( But I think now after finding additional cash (cf. news) it should continue as before...
Hmm. I'm new to options selling, have never heard that saying yet.
Actually my option scanner is to blame for this pick...
Yeah, thx for the confirmation
Yeah, indeed, spreads are at top on my todo list. Thx.
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Yeah, those are some of the decisions that traders may have to make.
The put is about $5 ITM. Last trade 5.48 one lot. Was that you OP?
No, I still have it open. I just looked: my opening trade was on Jul-07 when USpot was at 5.62 and of the said Strike 7.5 the Bid=4.90 Ask=5.60, filled at 4.95. Ie. that Put was already about 7.5 - 5.62 = 1.80 ITM when I opened it.
These data I can read from the screenshots I always make of any such openings and closings,
b/c the brokers unfortunately don't save such IMO important data like the USpot, and of the option the Bid, Ask, IV, at the time of the filling, but these data is IMO important for the trader.
I have two open orders on that position:
- Buy-to-Close at profit >= 25% (seems very unrealistic atm; the calc is based on chg% in premium, not real profit% as this is only about half of it)
- Sell-to-Open (ie. doubling down) @ Premium 6.55 (will maybe even set it some higher
)It could make sense if after that the EV car production finally starts and the stock again rises...
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Thx, true. Just learning the bitter lessons of Mr. Market...
@zghorner, coming back to this statement of yours:
"Being short vol in this environment without a hedge of some kind is begging to be sent to trader heaven."
Can you explain it a little bit: does in this case of USpot crashing your above saying of "being short vol" apply?
B/c IV has stayed the same. So, IMHO rather unconditionally (ie. regardless of vol) one should have a hedge. Isn't it?
"Being short vol in this environment without a hedge of some kind is begging to be sent to trader heaven."
Can you explain it a little bit: does in this case of USpot crashing your above saying of "being short vol" apply?
B/c IV has stayed the same. So, IMHO rather unconditionally (ie. regardless of vol) one should have a hedge. Isn't it?
fix: in the OP I wrongly said "ATM", it wasn't ATM. Fixed in this posting. Sorry for the confusion.
what are you calling "USpot"? US spot as in the dollar index? I don't understand the relation.
and IMO selling options without a hedge simply for the sake of collecting the premium is always a bad idea.
USpot; Spot of the underlying
gotcha. so in this case, yea you obviously should have had a hedge even though IV hasn't increased (the only time I would argue not to is if perhaps you wanted to actually acquire the shares). But one smart thing you did (probably the smartest thing you can do when selling options), was wait until IV was high to sell...
on a second look, on your purchase date IV for Jan options (green line) was 190%...so not THAT much higher than now...still better than the opposite situation.
So the question is, do you expect IV to drop enough moving forward to make holding a loser worth it? Doubt.