Selling itm (covered) calls the same as shorting the stock?

[taowave]

TA trades??? LOL!!!!!

I'm also down on GME... Actually my break even on MARA is 18.31.

However, these weren't TA trades. It was my Hulk system of selling atm money puts then turning around and selling atm calls... Basically a premium collecting machine. You said that you're not going to overcome large drawdowns but in fact had I employed that strategy I would have been out and earning the whole way down so my break even would be much lower now.

You should let me join your little club so I can help you out with your TA shortcomings...collaboration is the key right?


Anyway being down isn't a problem...I get paid when the big boys go to collect their money from accumulating all those shares on the way down.

 

[wxytrader]

Convert part of your position to the Oct. 18 Call Spread (10/19).

Buy 10C ... 3.80
Sell 19C ... .40
Total cost ... 3.40 ($340)
Just .05 of extrinsic value.
10.35-3.40= 6.95 ($695) .... cash back in the account.
If the stock closes at 16 or higher then roll the position up to the 13/22 Call Spread (maybe Nov. if getting close to expiration).


View attachment 348357

I have no idea how to roll stocks on IBKR desktop portal, or my broker...only on tos. So I am entering that as a $3400 debit? The problem is even if no extrinsic value, I could still lose intrinsic value if things continue down.

 

[deaddog]

Anyway, the best way to fix a down position is to throw more money at it, which I don't have right now.

Have you considered using the Lambo and your rolex as collateral?

 

[BKR88]

I have no idea how to roll stocks on IBKR desktop portal, or my broker...only on tos. So I am entering that as a $3400 debit? The problem is even if no extrinsic value, I could still lose intrinsic value if things continue down.

To convert 100 shares to the call spread enter ONE order to buy the 10C, sell the 19C and sell 100 shares of stock.
You should receive a credit of ~$1,000 (mid=-10.01). (***For every 100 shares you convert.)

***IB image below but most platforms will be similar. Some will use "Buy to Open" the 10C, "Sell to Open" the 19C and "Sell to Close" the 100 shares.

IF the stock gets to 16, then you can roll the 10/19 Call Spread to the 13/22 Call Spread.
This should be ONE order so "Sell to Close" the 10C, "Buy to Close" the 19C, "Buy to Open" the 13C, "Sell to Open" the 22C. This ONE trade should be a credit.

***IB image below but the prices will be different as the stock price will be above 16.

***Yes, you'll lose intrinsic value if the stock falls BUT you'll lose if you own the stock also. This is just a replacement for the stock which frees up cash AND the max loss on the initial Call Spread is $340 compared to owning the stock @1,335 which can go to zero.
When the stock reaches 16 you'll have less profit than if you held onto the stock UNTIL you hold the spread to expiration. That is the one drawdown of using options but you have $340 invested compared to $1,335 invested so you have to be willing to give in somewhere. No free lunches.

***Just try it with part of your position to see how it works.
***You only have to roll out of the 10/19 spread if you don’t want your profit capped at 19.

 

[wxytrader]

To convert 100 shares to the call spread enter ONE order to buy the 10C, sell the 19C and sell 100 shares of stock.
You should receive a credit of ~$1,000 (mid=-10.01). (***For every 100 shares you convert.)

***IB image below but most platforms will be similar. Some will use "Buy to Open" the 10C, "Sell to Open" the 19C and "Sell to Close" the 100 shares.
View attachment 348392

IF the stock gets to 16, then you can roll the 10/19 Call Spread to the 13/22 Call Spread.
This should be ONE order so "Sell to Close" the 10C, "Buy to Close" the 19C, "Buy to Open" the 13C, "Sell to Open" the 22C. This ONE trade should be a credit.

***IB image below but the prices will be different as the stock price will be above 16.
View attachment 348399

***Yes, you'll lose intrinsic value if the stock falls BUT you'll lose if you own the stock also. This is just a replacement for the stock which frees up cash AND the max loss on the initial Call Spread is $340 compared to owning the stock @1,335 which can go to zero.
When the stock reaches 16 you'll have less profit than if you held onto the stock UNTIL you hold the spread to expiration. That is the one drawdown of using options but you have $340 invested compared to $1,335 invested so you have to be willing to give in somewhere. No free lunches.

***Just try it with part of your position to see how it works.
***You only have to roll out of the 10/19 spread if you don’t want your profit capped at 19.

Ohhh! Converting not just buying a vertical spread. Ok I will look at this. Thanks for the explanation. I'm actually on the IBKR desktop, not the portal. I have used the strategy builder...actually I think they have a roll option if you right click on the position in the portfolio page.

 

[poopy]

To convert 100 shares to the call spread enter ONE order to buy the 10C, sell the 19C and sell 100 shares of stock.
You should receive a credit of ~$1,000 (mid=-10.01). (***For every 100 shares you convert.)

***IB image below but most platforms will be similar. Some will use "Buy to Open" the 10C, "Sell to Open" the 19C and "Sell to Close" the 100 shares.
View attachment 348392

IF the stock gets to 16, then you can roll the 10/19 Call Spread to the 13/22 Call Spread.
This should be ONE order so "Sell to Close" the 10C, "Buy to Close" the 19C, "Buy to Open" the 13C, "Sell to Open" the 22C. This ONE trade should be a credit.

***IB image below but the prices will be different as the stock price will be above 16.
View attachment 348399

***Yes, you'll lose intrinsic value if the stock falls BUT you'll lose if you own the stock also. This is just a replacement for the stock which frees up cash AND the max loss on the initial Call Spread is $340 compared to owning the stock @1,335 which can go to zero.
When the stock reaches 16 you'll have less profit than if you held onto the stock UNTIL you hold the spread to expiration. That is the one drawdown of using options but you have $340 invested compared to $1,335 invested so you have to be willing to give in somewhere. No free lunches.

***Just try it with part of your position to see how it works.
***You only have to roll out of the 10/19 spread if you don’t want your profit capped at 19.

Slow down. Wait.

So he SELLS 100 shares he owns... sells them. Then he BUYS the 10/19 cs. He SAVES almost $1K. Incredible.

 

[poopy]

Ohhh! Converting not just buying a vertical spread. Ok I will look at this. Thanks for the explanation. I'm actually on the IBKR desktop, not the portal. I have used the strategy builder...actually I think they have a roll option if you right click on the position in the portfolio page.

You're not rolling anything. Why would you put the 3-way on the same order ticket? Sell the stock and buy the stupid cs.

 

[taowave]

LOL!!!!

You're not rolling anything. Why would you put the 3-way on the same order ticket? Sell the stock and buy the stupid cs.

 

[wxytrader]

You're not rolling anything. Why would you put the 3-way on the same order ticket? Sell the stock and buy the stupid cs.

I should be able to do a call ratio spread for a credit if not a small debit better known as stock repair strategy. I'll try some different combinations.

 

[BKR88]

Slow down. Wait.

So he SELLS 100 shares he owns... sells them. Then he BUYS the 10/19 cs. He SAVES almost $1K. Incredible.

He said he was short on cash so I suggested he sell the stock and buy the call spread which puts ~$1,000 cash per spread into his account.
I never said he "SAVES" $1K.

You're not rolling anything.

I suggested he "roll" the SPREAD if the stock gets to 16. I wasn't telling him to roll the stock.

***I always put the stock and call spread on ONE order. Not sure why you think that's a bad idea. This way you don't have to worry if the stock takes a sudden move after you've sold the stock and working the call spread order.