Options.,... Argh... no more!!

[cmecu]

You got it wrong buddy. This is merely, a question of risk management. You do not have to wait till your options expire worthless. Most times, you got enough monies left to roll over into the next trade, the trade that could end up a big winner. They claim options sellers win 80-90%, I am not sure which one. Anyways, I find it hard to believe. I win 30-40% of the time buying calls and puts. Of late, where I cut my losses faster, I am at 55% winners so, how the hell do the options sellers get that 80% win rate? I think some people are lying about their actual win rates selling options and two, they are making paltry $50-$100 per contract profit but, giving it all back when they lose the big ones in the thousands. I tried selling options premium and lost thousands. I will take risking a few hundred per contract to win several multiples of my risk as my reward every day of the week. It is a no brainer. Just my 2 cents.

What you said about not waiting for expiration. Im newer to trading, I started with just buying and selling stocks , then I got into options. I lost at first because I didnt knwo what I was doing, I was buying long calls way out of the money because the premiums were like .04 or something cheaper..
I frequent Reddit options stockmarket wallstreetbets antstreetbets thetagang etc.. I learn something new everyday.
Coming back full circle to what you said in the beginning of your post. not waiting until expiry.
What I didnt know at the time is that you can make money buying back.. I sell covered calls on Fidelity, and on TD ameritrade I have higher option level / margin so i can do other strategies.
I kept looking at both sites, my positions where I either sold cash covered puts, sold covered calls, bought long calls etc..
Back then I never knew, or understood fully that if my option contract is up by like X % ( different people have different levels) but say something >50% , maybe 80%, then I can buy that contract back. I was wondering why for the longest time, why are the options that I sold green? Then i understood, I sold a contract for .40 the stock moves up or down ... now i can buy the contract back for .05 I make a 35 dollar profit.

I just got into rolling options too.. like example I bough Barricks GOLD long calls for 20 strike expiry was march 4th, well the price of it had jumped to 22 as i was getting near the 4th..so i rolled it up.. sold my 22, and rolled into 23 for like a .40 credit.. and now expiry 11th.. then today it got up near 25, I rolled again sold the 23 and bought the 24 , for another credit now expiry is 18th of march.. which I will hold this one because CPI comes out on the 10th. Inflation may drive it up more, the war may drive it up more..
I also have a 22strike Leap call expiry Jan of 2024 , that i have been selling short puts strike of 22 for 1 week at a time making 30 ish dollars here and there.
Im not to worried Barrick gold is dropping in a big amount any time soon. I know they are buying back 1 billions dollars in stock, but I still see a good future for this company who mines gold and other minerals.

Sorry off tangent. ADD kicked in I learn something new every day and there is still so much more to learn.

 

[smallfil]

What you said about not waiting for expiration. Im newer to trading, I started with just buying and selling stocks , then I got into options. I lost at first because I didnt knwo what I was doing, I was buying long calls way out of the money because the premiums were like .04 or something cheaper..
I frequent Reddit options stockmarket wallstreetbets antstreetbets thetagang etc.. I learn something new everyday.
Coming back full circle to what you said in the beginning of your post. not waiting until expiry.
What I didnt know at the time is that you can make money buying back.. I sell covered calls on Fidelity, and on TD ameritrade I have higher option level / margin so i can do other strategies.
I kept looking at both sites, my positions where I either sold cash covered puts, sold covered calls, bought long calls etc..
Back then I never knew, or understood fully that if my option contract is up by like X % ( different people have different levels) but say something >50% , maybe 80%, then I can buy that contract back. I was wondering why for the longest time, why are the options that I am sold green? Then i understood, I sold a contract for .40 the stock moves up or down ... now i can buy the contract back for .05 I make a 35 dollar profit.

I just got into rolling options too.. like example I bough Barricks GOLD long calls for 20 strike expiry was march 4th, well the price of it had jumped to 22 as i was getting near the 4th..so i rolled it up.. sold my 22, and rolled into 23 for like a .40 credit.. and now expiry 11th.. then today it got up near 25, I rolled again sold the 23 and bought the 24 , for another credit now expiry is 18th of march.. which I will hold this one because CPI comes out on the 10th. Inflation may drive it up more, the war may drive it up more..
I also have a 22strike Leap call expiry Jan of 2024 , that i have been selling short puts strike of 22 for 1 week at a time making 30 ish dollars here and there.
Im not to worried Barrick gold is dropping in a big amount any time soon. I know they are buying back 1 billions dollars in stock, but I still see a good future for this company who mines gold and other minerals.

Sorry off tangent. ADD kicked in I learn something new every day and there is still so much more to learn.

Good for you. There is no rule that you cannot sell an option that shows a profit. Funny, I have Barrick (GOLD) call options as one of my positions. I do not sell any options and only buy them.

 

[cmecu]

Good for you. There is no rule that you cannot sell an option that shows a profit. Funny, I have Barrick (GOLD) call options as one of my positions. I do not sell any options and only buy them.

Awesome I like Barrciks Gold also. Their earnings report doesnt come out until around May 4th I believe. I was hoping it will promote more growth in the stock, but I know this isnt always the case. I know earnings dont always mean something good will happen. I seen a while back ( dunno how long) Best Buy has an earnings report, it was a good report, and their stock dropped really hard right after. So, I take Barricks cautiously , especially as the current price is in resistance areas. I have to go back almost a year to find a 25.29 high , and Barricks is at 24.20 right now. Back in 2020 it was around 30.31 , and 2011 was its highest ever around 55.95 . When looking at look at their MAX timeline it shows 2004 and 1993-94 price is where it is now
Good luck to us with this stock.

I am newer to Leaps, I had bought a long call LEAP, strike 22 Jan 2024. The leap is worth 100 dollars right now. Im kinda torn on collecting money, or just holding and continue to sell OTM short term weekly puts and collecting weekly premiums. Once again we are up in that resistance area , I dont expect it to stay up here forever. Would be nice to hit that 50 dollar mark again though
It was up over 100 but GOLD dropped right at closing some.

 

[Cabin111]

Awesome ya i like Barricks. Their Earnings comes out not until may 4th I think.. somewhere around there. I was thinking at first, if they have good earnings it may drive it up more.. BUT i know earnings doesnt always mean anything ( although I did make a quick 2 day sale on Kroger the day before I bought 8 contracts, around 1 dollar ITM , next day when earnings came out, it shot up . i forget how far, I know I got out of it when I seen I made 500 dollars, I closed out the quote box chart so i didnt have to see it go up any more and feel bad. I am happy , anyway there I go again. off tangent lol.. damn ADD... But ya , earnings dont always mean anything, and I either watched a video, or read an article , a while back ( dunno how long) Best Buy has an earnings report, it was a good one, and their stock dropped hard , really hard right after. So I take Barricks cautiously , especially as we are in resistance areas. You have to go back almost a year to find a 25.29 high , and Barricks is at 24.20 right now. back in 2020 it hit 30.31 , and 2011 was its highest ever around 55.95 . Its funny, if you look at their MAX timeline, the one i have goes back to 2004 and 1993-94, where we are at now, is where it was then.
Good luck to us with this stock.

I am very much new to Leaps, I had bought a call leap in GOLD, strike 22 Jan 2024. The leap is worth 100 dollars right now. Im kinda torn on collecting money, or just holding and continue to sell OTM short term weekly puts collecting weekly premiums. Once again we are up in that resistance area , I dont expect it to stay up here forever. Would be nice to hit that 50 dollar mark again though
It was up over 100 but GOLD dropped right at closing some.

Your threads are a little hard to read. You have 60 minutes to edit your posts. You may want to read them back to yourself (while editing)...See if you can clean/clear them up.

PS I had ADHD so I know a little of what you're going through...

 

[cmecu]

Your threads are a little hard to read. You have 60 minutes to edit your posts. You may want to read them back to yourself (while editing)...See if you can clean/clear them up.

PS I had ADHD so I know a little of what you're going through...

Heh, ty .. Ya i do need to reread them. My mind just dumps words out all at once. I need to read them out to myself and hear how they sound. Sorry
I went back and re-editted what you quoted. Sounds better.

 

[ET180]

Why would I buy ONE NFLX 450 call as opposed to the Delta equivalent of the short put?

Are you basically saying that a short 450 put offers the most edge if one is bullish??? Or in your case,bullish up to 450??? Stocks been cut in half,if im taking 99 percent of the downside risk,im not synthetically shorting the 118 percent spot call for 50 bps or so.Havent looked,but I doubt the buywrite offers any "edge".

That's the point NWD and I are making...

Sure, you could. The point I was trying to make is that if you are willing to be long any stock without selling a higher-priced call (assuming that option is available) for a given expiration / period of time, then by definition, you believe that the call is underpriced (otherwise you would short it). I gave the example to challenge the idea that selling far out calls never makes sense if you are bullish on the underlying, well, it really depends on where you think the underlying will go and how much faith you place in that forecast. In this case, I think the long stock + short call will outperform the long-only strategy. Even if it only beats it by half a percent, over a large number of occurrences it adds up.

so, now in NFLX you have created a vol view (either to support your current position or before you initiated your current position). Does the current trade best reflect your vol view?

btw - I agree with your vol view and I am positioned for it. But I will probably earn more per share than you will if my view is correct.

So you think NFLX will rally more than 18% within 41 days at this time of writing...actually, since it dropped since I submitted that idea, it now needs to go 20%. I'd say that is unlikely (lockdown ending, competition, inflation pressures, high content cost / weak content), but you could be right. I think I misunderstood your definition of vol view. I think what you really mean is price range expectation and not the change in implied volatility of the underlying. For a stock could basically do a step-function, swing up 2% one day, then down 2% the next, have high implied volatility, and still stay within a narrow price range for some period of time. I don't consider those day to day fluctuations. I only care about the price range over the holding period. So if that's what you are referring to, then we agree.

You are giving up edge when you trade ditm options. You will get a much higher chance of mid fill going long stock short call than going short ditm put. Just my 2 cents worth.

Agree, I think I mentioned in the same post where I gave my 5 trade ideas that it would make more sense (narrower spread) to buy the underlying and sell the OTM call. But I just gave the short put alternative to keep it simple.

 

[taowave]

Had you followed your belief and sold a 30 day 85 delta put in NFLX and rolled,monthly,over the last 10 years you would have under performed the stock by 800 bps per annum..And your worst drawdown was less than 100 bps better..No different in AAPL

If vol is high,and I was delta hedging,why would I (you) sell the 15 delta call????

I believe you are the one who said trading direction and timing is extremely difficult,and now you are adding path dependency??

Backtest your beliefs

Sure, you could. The point I was trying to make is that if you are willing to be long any stock without selling a higher-priced call (assuming that option is available) for a given expiration / period of time, then by definition, you believe that the call is underpriced (otherwise you would short it). I gave the example to challenge the idea that selling far out calls never makes sense if you are bullish on the underlying, well, it really depends on where you think the underlying will go and how much faith you place in that forecast. In this case, I think the long stock + short call will outperform the long-only strategy. Even if it only beats it by half a percent, over a large number of occurrences it adds up.



So you think NFLX will rally more than 18% within 41 days at this time of writing...actually, since it dropped since I submitted that idea, it now needs to go 20%. I'd say that is unlikely (lockdown ending, competition, inflation pressures, high content cost / weak content), but you could be right. I think I misunderstood your definition of vol view. I think what you really mean is price range expectation and not the change in implied volatility of the underlying. For a stock could basically do a step-function, swing up 2% one day, then down 2% the next, have high implied volatility, and still stay within a narrow price range for some period of time. I don't consider those day to day fluctuations. I only care about the price range over the holding period. So if that's what you are referring to, then we agree.



Agree, I think I mentioned in the same post where I gave my 5 trade ideas that it would make more sense (narrower spread) to buy the underlying and sell the OTM call. But I just gave the short put alternative to keep it simple.

Sure, you could. The point I was trying to make is that if you are willing to be long any stock without selling a higher-priced call (assuming that option is available) for a given expiration / period of time, then by definition, you believe that the call is underpriced (otherwise you would short it). I gave the example to challenge the idea that selling far out calls never makes sense if you are bullish on the underlying, well, it really depends on where you think the underlying will go and how much faith you place in that forecast. In this case, I think the long stock + short call will outperform the long-only strategy. Even if it only beats it by half a percent, over a large number of occurrences it adds up.



So you think NFLX will rally more than 18% within 41 days at this time of writing...actually, since it dropped since I submitted that idea, it now needs to go 20%. I'd say that is unlikely (lockdown ending, competition, inflation pressures, high content cost / weak content), but you could be right. I think I misunderstood your definition of vol view. I think what you really mean is price range expectation and not the change in implied volatility of the underlying. For a stock could basically do a step-function, swing up 2% one day, then down 2% the next, have high implied volatility, and still stay within a narrow price range for some period of time. I don't consider those day to day fluctuations. I only care about the price range over the holding period. So if that's what you are referring to, then we agree.



Agree, I think I mentioned in the same post where I gave my 5 trade ideas that it would make more sense (narrower spread) to buy the underlying and sell the OTM call. But I just gave the short put alternative to keep it simple.

 

[smallfil]

I trade nothing but options and have been in the market for 19 years. Have a rule set that you don't break, i.e a stop loss plan and a sell point plan. Mostly though you need to learn how to read a chart. jmho

You nailed it on the head. Good stock and options trading involves, knowing how to read a StockChart to interpret the data it is giving you, and acting on it and taking a position. Entering and exiting a position is also, a part of a good trading plan. More importantly, lost on many traders is that, you have a positive expectation or edge in your trading system. Otherwise, you are just gambling. Go to Las Vegas, atleast, the casinos will give you comps for losing all your monies. If you lose your monies gambling in Wall Street, you do not even get any comps for all your losses. All you get is heartburn and empty pockets.

 

[smallfil]

If you can hold until expiration, you don't care about the premium increase due to volatility unless you're running with low margin.



That can work, but you're basically trading pure delta. The premium on a deep ITM option will be very low and you might as well just trade the underlying directly. Only point of using options in that case is to reduce your margin / leverage. Being long a deep ITM call is synthetically equivalent to long stock + buying deep OTM put. So then it just comes down to how well you can pick direction.

The reason I use options instead, of holding stock is the returns. I also, hold shares and call options at times. However, that same stock could give me 20-30% returns in say 1 month if it is in a nice trend, a call option on that same option could give me 100%, 200% or more. It just makes sense for me to use the leverage to increase my returns on monies I risk.

 

[Primal Trader]

Options definitely require a major shift in awareness and thinking in non-linear terms! I have quite a ways to go. For swing trading what is working for me is focusing on a handful of instruments that I am getting to know fairly intimately in terms of patterns and behavior. SLV, GDX, UNG.

For day trading I am working hard at mastering options on the micro ES futures, MES. I am finding that I actually prefer it over the MES future quite often. Now I can vary the delta and thus risk that I am using by going futher ITM or OTM. IF things are especially volatile I can use a low delta strike and stay within my stop loss limits. With the future I am stuck with $5 per point.