Hedging the wheel

[BlueWaterSailor]

Have you been reading some of these comments?
They have nothing to do with what we're talking about.

You're one of the only people here making sense.

I have. As in any convo, some people - not all - are going to contribute the majority of the value. But you're not even listening to those.

Giving you the benefit of the doubt - what little of that is left - you're really, truly failing if you don't think about what people like @destriero and @newwurldmn are saying. You really are. Take the time and work it through.

 

[markthepadrone]

Now you get zero benefit from any rise in the underlying that you're holding, have locked in an automatic $2 additional loss into it, and paid the haircut on all those trades. Go on, tell me more...

I don't want to benefit from "any rise". I just want it to expire.

 

[markthepadrone]

I have. As in any convo, some people - not all - are going to contribute the majority of the value. But you're not even listening to those.

Giving you the benefit of the doubt - what little of that is left - you're really, truly failing if you don't think about what people like @destriero and @newwurldmn are saying. You really are. Take the time and work it through.

I don't understand how I'm failing by taking a profit.
And, yes, I'm listening to the people that listen to me, like you.

 

[destriero]

Can you actually read English? What makes you think I'm waiting for a drop?

Respectfully, you're fcking r*tarded.

If there isn't a dip mid/late day Monday, the risk of assignment is too high and I'll wait till the next week

 

[BKR88]

"You're short a naked call either way"
What did you mean by either way?

Way 1: (your way)
Long TQQQ
Short MNQ
Short 26.5 Call

Way 2: (my way)
Long TQQQ
Sell TQQQ (remove long position)
Short 26.5 Call

***Both methods leave you short the 26.5 call. Both other positions have been canceled/removed.

***If you want to remove TQQQ movement effect, just close the position rather than short MNQ. Canceling the movement eliminates it's use as a covered call.

***See my previous post to see what the P/L is when TQQQ closes at 20 or 30.

 

[markthepadrone]

Respectfully, you're fcking r*tarded.

If there isn't a dip mid/late day Monday, the risk of assignment is too high and I'll wait till the next week

Wow. Big writing from such little hands.
Have you ever back tested this or are you just guessing that I'm wrong?

 

[Wolf_Trader]

Because I'm short. I wanted it to expire worthless. I sold it for a credit, when it expires, I just keep the credit.

What's the difference between rolling the short put strike for a net credit vs taking stock and selling a call. Is the difference that you're scared of further downside?

 

[markthepadrone]

Way 1: (your way)
Long TQQQ
Short MNQ
Short 26.5 Call

Way 2: (my way)
Long TQQQ
Sell TQQQ (remove long position)
Short 26.5 Call

***Both methods leave you short the 26.5 call. Both other positions have been canceled/removed.

***If you want to remove TQQQ movement effect, just close the position rather than short MNQ. Canceling the movement eliminates it's use as a covered call.

Perfect example of someone that comments without understanding what we're talking about.
Who said anything about selling TQQQ before selling the TQQQ covered call in Way 2?

 

[destriero]

Wow. Big writing from such little hands.
Have you ever back tested this or are you just guessing that I'm wrong?

This thread is clearly tested, empirical proof that you're r*tard*d.

And dude, I am 6'3" 250. 12% on calipers.

 

[BlueWaterSailor]

I don't want to benefit from "any rise". I just want it to expire.

Right, so here's the problem: you don't get to have that. If there was an underlying that never moved or only moved up, nobody would pay you for risk on it. You're getting paid for selling insurance against the downside - which means there is a downside. Which YOU get hurt by when it happens, with a long-term expectancy of $0 profit (as for any trade without specific alpha or advantageous mispricing.)

But take the other half: the CC after you're assigned. Say you've paid $100k for 1000 shares... you'd really be OK with that stock sitting there week after week, not gaining anything at all for you while inflation is taking money out of your pocket, and doing (again) zero-expectancy trades while you do? Give that some thought.

(Note that vol - and so premium - on a waterlogged stock like that is damn near nothing. But even if you could sell it at $1/lot/week, that's a return of ~5%/year on your exposure. Which presumes a steady/rising market, in which B&H on S&P 500 traditionally returns something like 9%. What was the point, again?...)