Hedging the wheel

[newwurldmn]

It must be a hard life for you thinking that everything you're not capable of is impossible.

real successes in this field trade micro contracts.

Edit: I thought you were some punk. Your 17 years older than me!

 

[BlueWaterSailor]

> Fair enough. I don't agree but I see your point.

OK. You don't understand that hedging the underlying essentially removes it from the equation and you're net a short, naked call as a result; that's fine. Good luck in your trading.

 

[destriero]

With no disrespect to him, there is a giant difference between skimming flow and trading for yourself.

He's had upstairs wins as an independent in the seven figures. I talk to him daily and have seen his book. We're not talking the same language here.

I have a Telegram group with a bunch of pros in it. Not one of them would consider running a book of CC/SP. There is no fcking way that you're going to earn 20% compounded, let alone 100%.

Everyone new to vol think they invented the wheel (pun unintended). You're at step 2 in the 12-step program. Step 4 or 5 is realizing that you haven't a mofo clue what you're talking about. You're going to look back at this thread and cringe.

 

[Wolf_Trader]

1) "is wheeling profitable?" (it can be in the right market and with experience)

It seems tinkering with ineffective hedges make this into something other than a "wheel".

 

[destriero]

Keep in mind that you are the option beginner... and a very stubborn too.
"They" are experienced professionals.
You just don't understand what they are talking about, seriously. Lost in translation.
They are so ahead of you that if they look behind they see your option trading future!
> Thanks for being so specific. Now I really understand.
> I use the Greeks that are provided by the market makers, so yes, I know who the professionals are.

If you limit the downside 1:1, you are naked the upside when selling covered call. If you don't limit the downside, you are naked on the downside.
> Correct. Why would I care if I'm naked on the up side? If I sell a CC with a strike at my cost basis and the market goes to the moon, why would it mater if I closed the MNQ short in time?

Selling cash secured puts to begin with and covered call, collar or whatever you build adjusting... pays peanuts, compared to the risk you are taking either way.
> Just not true. I might be a high risk, but it pays well. Think about it this way. If I sell a put and get assigned at 100 with TQQQ at 95, my realized risk is 5. Yes, it has the potential of being much more, but it isn't. The market can either go up again or down. If it goes down and my MNQ short picks up the slack at 92, my loss will stay locked at 8 no matter how low it goes. I can then sell CC based on a basis of 92 over and over again. Yes, if the market continues to drop, the premiums will go lower but over time those premiums will eat away at my basis so I can sell strikes less than 92 and still make money.

Say you're in the TQQQ/MNQ/short upside call position. What happens when mkt rallies, you cover your MNQ and the mkt falls? You're not going to cover your calls. You're going to gamma-trade the thing at monetized losses, indefinitely?

Dude, you're too old to suck at this.

 

[destriero]

Dude, short euro-style contracts or stop with the irrational fear of assignment. You don't understand the concepts. OMG, spot touched the strike! ASSIGNED! You should be so lucky. WTF do you think happens when you're assigned with $3 in prem on a strike touch of your short put?

This thread. Pays.

 

[markthepadrone]

real successes in this field trade micro contracts.

Edit: I thought you were some punk. Your 17 years older than me!

Just cause I’m older doesn’t mean I’m not a punk.

And, I’m sorry that I may have made derogatory comments to you if you were really trying to help me. I just got a little over whelmed by the bombastic critiques.

 

[markthepadrone]

He's had upstairs wins as an independent in the seven figures. I talk to him daily and have seen his book. We're not talking the same language here.

I have a Telegram group with a bunch of pros in it. Not one of them would consider running a book of CC/SP. There is no fcking way that you're going to earn 20% compounded, let alone 100%.

Everyone new to vol think they invented the wheel (pun unintended). You're at step 2 in the 12-step program. Step 4 or 5 is realizing that you haven't a mofo clue what you're talking about. You're going to look back at this thread and cringe.

That may be entirely true. I just may have realized that sooner if some of you actually provided detailed reasons for what you were telling me instead of just saying I had no idea what I’m talking about.

 

[markthepadrone]

Dude, short euro-style contracts or stop with the irrational fear of assignment. You don't understand the concepts. OMG, spot touched the strike! ASSIGNED! You should be so lucky. WTF do you think happens when you're assigned with $3 in prem on a strike touch of your short put?

This thread. Pays.

I don’t have an irrational fear of assignments.
I get assigned every fourth or fifth week. Not a big deal.

 

[destriero]

That may be entirely true. I just may have realized that sooner if some of you actually provided detailed reasons for what you were telling me instead of just saying I had no idea what I’m talking about.

We've done that for 11 pages. You're fixated on this silly hedge. Hedge out your D1 risk and you're left with naked short calls. Not to belabor it, but you're trying to subjectively make this a lock.

I can go long XYZ at 100 and short the 100-strike bear synthetic. The only uses of trading the conversion arb is delaying tax liability or as a rate arb. A gain on your silly hedge has nothing whatsoever to do with a covered call position.

If the hedge is effective you've made a few bucks on your short calls. If not you lose more than if you had held the CC position. You're not gaming anything here. You're inadvertently arbing TQQQ/MNQ with a short call position.

I cannot procrastinate any longer. Bye.