Beginner help: Call Options

[zoned_post_meridiem]

I like smallfil's idea -- today's volatility probably juices the premium a little if you want to hedge with a higher strike. But please do this only if you really know what you're doing. I have no idea if IDEX is on the hard to borrow list, or what would happen to your account if you get assigned the short position Friday at close and then have to wait until Monday to exercise your long position. 600 contracts is a lot.

Unless you're really confident in what you're doing, I'd hold up to whatever your pain point is (this stock can move back FAST), or just close your position.

 

[lindq]

Apologies. I should have mentioned that my Strike is 4 and expiry Jul 17

If your reasons for initiating the trade are still valid, then stay with it. If not, then exit or set a stop loss.

The time to start playing around with protective strategies is before a trade, not in the middle of it.

 

[OptionsOptionsOptions]

......today's volatility probably juices the premium a little if you want to hedge with a higher strike.

Adding (buying or selling) to a losing position is a stupid suggestion.

 

[Gaslight Capital]

I bought 600 Call Options expiring Jul 17 for $0.50 ($29,000) they are currently trading for $0.30

You have invested $29,000 in options on a penny stock, and the company whose business underlies that stock is a likely fraud.

One of my favorite follows on twitter is Hindenberg Research. The reason I am responding to you is that a little over an hour ago Hindenberg reiterated its research findings.

https://hindenburgresearch.com/ideanomics/

https://twitter.com/x/status/1276521180531474435

https://twitter.com/x/status/1276521172327424001

I post this because you are getting some questionable advice here, in my opinion.

The stock is a pump and dump scheme (scam). You made a bet that the pumpers would keep pumping before they started dumping. Unfortunately the stock will probably be trading for less per share than you paid for the options.

The $4 July 17c are $0.10 bid (an 80% loss of your capital) by $0.15 offer.

I wish I could help you, but there is nothing I could suggest other than not to take $29,000 positions in lottos.

 

[Flagada]

Thanks for all the replies. Awesome community here!

I was lucky enough that I exited my position on the stock when it peak at $3.8 so I have more than covered any losses on the Calls (just got greedy there and over purchased Calls)

i was looking for a way to salvage some of the losses but can also ride it out and/or lose it all.

not much maneuvering here with the stock down 50%

 

[smallfil]

Looks like you have lost most of it. Learn risk management otherwise, it just takes one bad trade to wipe you out. I think you are taking way too much risk per trade. Not a good way to trade and harmful to your financial health in the long run.

 

[zoned_post_meridiem]

Adding (buying or selling) to a losing position is a stupid suggestion.

Hedging isn't adding. You're taking some risk off the table by limiting potential gains.

But I mean, you're not wrong in practice here. I'd either hold on to my position or get out and call it a lesson learned. Unless OP is willing to lose the premium he paid, I sure wouldn't hold over the weekend.

 

[Flagada]

I mean, I don't want to sound like I'm a complete reckless fool, my trading account is much larger than this position so this is a relatively small position but I completely understand how risky it was and I've learned from it.

90% of it's value is gone, so at this point, I might as well roll the dice and hold it? (I know I hear myself saying the words)

I would like to learn how to enter a position like this one with downside protection. I'm not quite certain how to derisk a Buy Call, perhaps with a spread between a Buy / Sell call?

 

[smallfil]

I mean, I don't want to sound like I'm a complete reckless fool, my trading account is much larger than this position so this is a relatively small position but I completely understand how risky it was and I've learned from it.

90% of it's value is gone, so at this point, I might as well roll the dice and hold it? (I know I hear myself saying the words)

I would like to learn how to enter a position like this one with downside protection. I'm not quite certain how to derisk a Buy Call, perhaps with a spread between a Buy / Sell call?

Usually, hedging a position cost you monies. Options be it calls or put have already a built in risk limit which is the cost of the premium. You cannot lose more than that. You can always limit your losses to 50% of the premium by selling it when it reaches that limit. That reduces your risk even further. That said, direction plus a large movement is what is needed if you buy put or call options. Proper risk management including, position sizing is more important. You never know which stock is going to be a big winner until it happens. So, treat each trade equally. Risking 2% if you have an edge, you will make monies and be relaxed and not sweating it. Just my 2 cents.

 

[Flagada]

Usually, hedging a position cost you monies. Options be it calls or put have already a built in risk limit which is the cost of the premium. You cannot lose more than that. You can always limit your losses to 50% of the premium by selling it when it reaches that limit. That reduces your risk even further. That said, direction plus a large movement is what is needed if you buy put or call options. Proper risk management including, position sizing is more important. You never know which stock is going to be a big winner until it happens. So, treat each trade equally. Risking 2% if you have an edge, you will make monies and be relaxed and not sweating it. Just my 2 cents.

Great advice. Thank you!