I need help managing a bull put; I did not fully understand the trade.
- Thread starter klattermusen
- Start date
The advantage is the reduction of risk to < 0.60 albeit for 3 days. The OP is going to hold the underlying for the longer term anyway as he believes that the price is going to bounce back up starting the following Monday
so any change in margin during those three days is a moot point. That long put leg from the spread is not going to protect the underlying over long term anyway cuz it's only got 3 DTE after the ex-div so you might as well sell it when it's got extrinsic value. As I suggested before, to protect his underlying, he can buy a put with longer expiration or using the "jargon", roll it to a future expiration to hedge.
It's actually more important to protect the underlying if the OP wants to hold it to ride the possible up move after ex-div because it's the one that's got delta of 1. The bull put spread that expires Nov. 25, you just try to lower the risk as much as possible. Like I said, that's how I would trade it.
Exactly!! If he doesn't get assigned, then of course he doesn't need to do anything. He gets to keep the whole $0.40 premium. We are talking about if and when he gets assigned.
Check your math, reread McMillan,reread your posts..in no particular order
This is essentially what you said..
"After you are assigned on the short,you have no more short put so its just a single long put...you can sell it whenever you want"
And what do you propose he does with the long stock from assignment??
This isn't cash settled...He will be long stock....
OP is in a synthetic call,and you are officially a numnut
put
One last time:
Read it in its entirety. Just to guide you a bit, read the part that starts with "Starting Monday...".
Yeah I don't do that shit. I don't put people in a hierarchy especially not based on how much $$ they make and definitely not based on how much one spends on commissions (assuming the figures are true). LOL With all due respect, I don't believe the amount of commission one spends is any indication of the quality of one's trading or success. We are not doing a commission porn here.
The amount of commission you spend just shows you are making your broker very happy LOL which is good. I am not judging but here, it's the quality of the trading and the quality of advice that counts. That's why no matter how annoying @taowave is sometimes, he is still not on my "Ignore" list yet as he's at least contributing with good insight sometimes unlike some other fake shit bozos. But you want me to just listen to people and worship them unconditionally just because of whatever? That's not going to happen. LOL I know the financial industry is very hierarchical; you make the dough, you basically walk around like you are the king and everybody has to listen to you and treat everything you say as the bible or whatever and maybe they want to carry some of that shit here? I dunno but No. On ET here, everybody is equal. Somebody who makes $100 spending $10 in commission is just as important as somebody who makes $10,000 and spends $1 million on commissions (assuming it's true). Everybody here has an equal voice and can express their viewpoints. I have my own viewpoints that I believe I have the right to express and you have yours. We are free to disagree with each other and debate about it and I welcome the debate. You have something good to offer, I listen. I don't agree with what you said, I express my disagreement. We can debate until the cows come home and end up either agreeing to disagree or putting each other on "Ignore". If you are fake and/or too annoying and have nothing to offer, I block you completely as if you never existed. That's it.
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I have read and reread your posts,and more importantly,I read the OP post. He doesnt want additional downside exposure,which you seem to ignore.
Back to you..
What is the significance of trading(lifting a leg) ex div? What advantage does one get? Are you suggesting that there is an upward bias post going ex??
How does one know if the ATM leg is "no good"? Thats simply your opinion.
The .60 of risk is yesterdays news. The trade is marked where it is. New day,new trade.
Why are you hell bent on taking a bet with a halfway human risk reward to one with an unfavorable risk reward,especially if he is not assigned on the short put.I did not see the OP stating he is a buyer at 10. To the contrary.He does not want gap risk,i.e downside exposure more than he took on via the put spread.
FWIW,lifting legs to get back the debit(risk .60) is not a great approach to trading,especially on an oversight trade. Are you suggesting that selling the OTM put with 3 days left is a great opening trade??? In 2 seconds,I saw much better trades which I will be looking at on Monday.
And of course if the stock doesnt go down any further,there is no harm lifting the leg IF you want to be naked long..OP does not..
Starting Monday..
Here is where you get very confusing.
You are suggesting the OP sell the 3DTE ATM out ex Div . Then come Monday,he can buy a put or put spread. Why wait till Monday??? If the calendar is trading at a favorabe price,why wait? Why be naked short the 11 put for 3 days? Whats magical about Monday?
Forget selling the upside call.Makes no sense,but you arent going to listen..
Back to you..
What is the significance of trading(lifting a leg) ex div? What advantage does one get? Are you suggesting that there is an upward bias post going ex??
How does one know if the ATM leg is "no good"? Thats simply your opinion.
The .60 of risk is yesterdays news. The trade is marked where it is. New day,new trade.
Why are you hell bent on taking a bet with a halfway human risk reward to one with an unfavorable risk reward,especially if he is not assigned on the short put.I did not see the OP stating he is a buyer at 10. To the contrary.He does not want gap risk,i.e downside exposure more than he took on via the put spread.
FWIW,lifting legs to get back the debit(risk .60) is not a great approach to trading,especially on an oversight trade. Are you suggesting that selling the OTM put with 3 days left is a great opening trade??? In 2 seconds,I saw much better trades which I will be looking at on Monday.
And of course if the stock doesnt go down any further,there is no harm lifting the leg IF you want to be naked long..OP does not..
Starting Monday..
Here is where you get very confusing.
You are suggesting the OP sell the 3DTE ATM out ex Div . Then come Monday,he can buy a put or put spread. Why wait till Monday??? If the calendar is trading at a favorabe price,why wait? Why be naked short the 11 put for 3 days? Whats magical about Monday?
Forget selling the upside call.Makes no sense,but you arent going to listen..
Ok you misunderstood then. I never specified that he needed to absolutely wait until Monday to buy the put or put debit spread to hedge against the long underlying if he's assigned. He can buy the long put or put debit spread as soon as he got assigned to protect his long underlying if he's set on riding the up move starting the following Monday. So there, he's covered. Now that just leaves the long put leg from the bull put spread.
I already went through the benefit of selling the long put from the bull put spread a million times I am not going through it again. That's just how I trade. I don't see the merit of leaving it open to let it expire worthless in case if the price doesn't drop below $10 when he could've sold it when there is still some extrinsic value left IF he's already assigned AND he's already bought a long put and put debit spread with the next expiration to cover the downside risk. And if there is still some value to be salvaged, why not? And to say not to do it just because "it's complicated" imo is unjustified. If the OP is able to do a bull put spread, he's able to sell a long put leg. LOL
One last time, if he gets assigned, he should buy a long put or put debit spread to protect it. If he doesn't get assigned, then nothing needs to be done. He collects the premium on the bull put spread. And then he can contemplate how he's going to still get in on the up move that he's anticipating in the upcoming Monday.
That's how I would trade it.
As a trader,you dont put people on a hierarchy based on how much money they make,or some form of risk adjusted returns??
On ET,everybody is equal????
Dude,you have an answer for everything except how to make money trading...
If you are serious about trading,you need to get past yourself...
You can thank me later
On ET,everybody is equal????
Dude,you have an answer for everything except how to make money trading...
If you are serious about trading,you need to get past yourself...
You can thank me later
Yeah I don't do that shit. I don't put people in a hierarchy especially not based on how much $$ they make and definitely not based on how much one spends on commissions (assuming the figures are true). LOL With all due respect, I don't believe the amount of commission one spends is any indication of the quality of one's trading or success. We are not doing a commission porn here.
Everybody here has an equal voice and can express their viewpoints. I have my own viewpoints that I believe I have the right to express and you have yours. We are free to disagree with each other and debate about it and I welcome the debate. You have something good to offer, I listen. I don't agree with what you said, I express my disagreement. We can debate until the cows come home and end up either agreeing to disagree or putting each other on "Ignore". If you are fake and/or too annoying and have nothing to offer, I block you completely as if you never existed. That's it.
Appreciate the "Thank You" .....
I see said the blind man....
You are a buyer of the calander without saying it....or knowing it????
Dont answer...This is torture
I see said the blind man....
You are a buyer of the calander without saying it....or knowing it????
Dont answer...This is torture
You are a buyer of the calander without saying it....or knowing it????
Dont answer...This is torture
Too late.
What do you mean "a buyer of the calendar"? You lost me there...
you need to stop feeding the troll.
he’s never going to get that 10/11 bull spread doesn’t care if it’s made of puts or calls.