Is this a red flag or white?

[thecoder]

@7out, thanks for the explanation. Yes, your calc is correct.
Here one can analyze the 1st case further graphically:
https://www.optioncreator.com/stcwpv7
You can fill-in the Premium field, it will calc the IV.

 

[thecoder]

I think you can improve both the risk as well the profit to your favor by selling 2x calls. Check this:
https://www.optioncreator.com/stiyarg
In this case your profit zone is much wider (it enters the loss zone only if the stock falls below 2.60, which of course is very unrealistic from the current 7.9 to 9.30 range).

 

[7out]

I think you can improve both the risk as well the profit to your favor by selling 2x calls. Check this:
https://www.optioncreator.com/stiyarg
In this case your profit zone is much wider (it enters the loss zone only if the stock falls below 2.60, which of course is very unrealistic from the current 7.9 to 9.30 range).

I doubt our account will allow short naked calls, but in any case I feel more confident in this stock rising than dropping (hence my initial interest in this stock).

 

[thecoder]

I doubt our account will allow short naked calls, but in any case I feel more confident in this stock rising than dropping (hence my initial interest in this stock).

Yeah, for this you would need a margin account instead of the normal cash acct.
Ok, I hadn't analyzed that stock regarding recent developments and direction, you surely have more insight in it.

 

[Amun Ra]

I doubt our account will allow short naked calls, but in any case I feel more confident in this stock rising than dropping (hence my initial interest in this stock).

If you think the stock is going up, you write naked puts, not calls.

 

[thecoder]

If you think the stock is going up, you write naked puts, not calls.

He did! Just the synthetic version:
Long Stock + Short Call = Short Put
More info:
https://www.theoptionsguide.com/synthetic-short-put.aspx

 

[Amun Ra]

I entered into some $6/$4 vertical put credit spreads this morning. Collected an average of $75.80 per contract.

 

[7out]

I entered into some $6/$4 vertical put credit spreads this morning. Collected an average of $75.80 per contract.

Don't see the point in buying/covering the $4 put, CRBP is sitting on $121MM in cash (if you researched it).

 

[thecoder]

I entered into some $6/$4 vertical put credit spreads this morning. Collected an average of $75.80 per contract.

Is it something like this? : https://www.optioncreator.com/st7n8ni
It has no risk, but the profit potential is also limited.

 

[Amun Ra]

Don't see the point in buying/covering the $4 put, CRBP is sitting on $121MM in cash (if you researched it).

Broker requires 100% margin on that stock for naked options which actually makes my returns lower. Instead of getting $1.25 for putting up $600 with 1 naked put, I can get 3 credit spreads for $.75 each collecting $2.25 while still only putting up the same $600 because the margin is only $200 per credit spread.

So that's why I do it that way. So I make 80% more money.

Hope that clears it up.