Nicely put!
Alice in Optionsland
- Thread starter qlai
- Start date
So I screwed up today. I don't normally trade anything related to TSLA, but today I couldn't help myself and decided to buy a put when TSLA hesitated around 1040s. Since I normally sell puts in that account, I accidently sold the $990 put instead of buying it. As Murphy's law would have it, it moved immediately against me. So I decide to "fix" it by creating my first ever calendar spreadNow watch me sweat trying to get out of this with as little damage as possible (or with a profit?).
View attachment 270003
Net debit: ~$37.50
I don't get how you lost money with your short put. You sold a put albeit accidentally and then the underlying went up so you should've made money. How did it "move against" you? It moved for you as far I can see. If you weren't comfortable with the expiration date so far out, you could've still closed the short with a profit. Am I missing something here??
Why did you feel you had to buy that put so far out with the expiration? Now you are losing money on the long put with the farther out expiration date that you bought with a high price and with time decay unless TSLA makes a huge move i.e. Elon Musk says something stunning.
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I sold the put as TSLA was going down fast, so it had open losses. The first thing I could think off is - let’s hedge it and reassess the situation later. The trades were maybe 10 minutes apart.
My premise is that TSLA is going to be range bound for some time around 1000 level but still volatile. My short leg will decay faster and will either expire worthless or I will take the stock at 990 with long leg serving as protection. Although it will not really protect me enough, so it’s not desired.
Once I am out of short leg, I should have enough time to sell another short put at same premium. If I hold shares I will look to sell a covered call. That should cover the cost of the long put I am holding. So at that point I should have a paid-for long put with plenty of time to expiration (lottery ticket). I will make the choice when I get there.
Above is the rosy scenario. The worst case is TSLA moves too far away from 990 and I can’t get enough premium to recover original deficit.
This is all quite hypothetical and I doubt it will all go smoothly. In my mind. I already booked the loss to the R&D column.
My premise is that TSLA is going to be range bound for some time around 1000 level but still volatile. My short leg will decay faster and will either expire worthless or I will take the stock at 990 with long leg serving as protection. Although it will not really protect me enough, so it’s not desired.
Once I am out of short leg, I should have enough time to sell another short put at same premium. If I hold shares I will look to sell a covered call. That should cover the cost of the long put I am holding. So at that point I should have a paid-for long put with plenty of time to expiration (lottery ticket). I will make the choice when I get there.
Above is the rosy scenario. The worst case is TSLA moves too far away from 990 and I can’t get enough premium to recover original deficit.
This is all quite hypothetical and I doubt it will all go smoothly. In my mind. I already booked the loss to the R&D column.
Without analyzing the spread thru Orats,I would GTFO and look for some fly around 1000..
Don't love 60 dollar calendars with the short .25 of the long..
I'll analyze later,maybe there is edge,but I doubt it
Don't love 60 dollar calendars with the short .25 of the long..
I'll analyze later,maybe there is edge,but I doubt it
I doubt there's any edge in it, but I have big plans for this trade. Stay tuned ...
I’m not a volatility trader(that much is obvious), so my assumption is that all options are priced “fairly” I’m waiting for short leg to expire and re-assess the situation.