Strategy: Selling Put Options: The Best Income Method?

ok.. whew.. now I got where you are getting your pnl from... Normall you woult not combine the put into the cost basis of the long stock... it is a separate position.Anyway, I plugged it into my dissector and your risk is if WB sits here and does not scream up.. You have risk bec u are long juice which leaks daily .. this is trade 2 days roughly
upload_2017-4-13_23-1-0.png


This is trade+5 days .. see how at 49.05 the position leaked?maybe sell another set of calls?
upload_2017-4-13_23-1-57.png
 
EdgeQuest said:
ok.. whew.. now I got where you are getting your pnl from... Normall you woult not combine the put into the cost basis of the long stock... it is a separate position.Anyway, I plugged it into my dissector and your risk is if WB sits here and does not scream up.. You have risk bec u are long juice which leaks daily .. this is trade 2 days roughly
View attachment 172819

This is trade+5 days .. see how at 49.05 the position leaked?maybe sell another set of calls?
View attachment 172820
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Yeah. I'm not done with trade yet. Will sell more premium. Ideal scenario will be a sharp move in the stock either direction.
 
Steven .. looked up ultima which is a 3rd order.. measures sensitivity of vomma w/ respect to volatility. ie the volatility of the vega change with respect to volatility.. as an example.. if you are short puts which is ( -vomma ) on sugar options when it was at 25 IV when sugar was 6 cents vs. short puts on sugar options which was around 40' IV when sugar was at 18 cents, you'd get hurt much more on your short puts at 40IV? anyone enlighten us here?
 
EdgeQuest said:
anyone enlighten us here
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Heck, I'm still trying to figure out the 1st tier of Greeks let alone the 2nd. Now I find out there's a third tier. I think that I'll stay with my credit spreads, focus on Delta and Theta and forget Gamma, Rho , and Vega. Not to mention the 2nd tier greeks Vomma Vanna, Charm and DvegaDtime, and the 3rd tier greeks Color, Speed, Zomma and Ultima. I read about those in a course I took years ago decided to focus on the 1st tier greeks wholly and only. Is there even a trading platform out there that has those indicators built in?
 
beefcaketrade said:
You quoted me 4 times with no response??
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Good evening beefcake. Not sure how that happened. Weird. I thought I answered your post in a different post I made.

I'm currently long the stock and long puts. Currently I am flat. My calls expired worthless. In summary I am long WB at 50.50 and still long puts bought at 2.10. I've collected .95 cents in premium. Net cost basis is 51.65. Long puts have a value of 1.10 hence the even money or flat trade.

i didnt see any benefit in closing it out since I can just sell a put against my long put or sell a call against the shares. Either way I have some time to react to what the shares do.

Ideally I would like to see the shares tank, sell some calls and make money on the puts. If I can make money on the puts, I may have an opportunity to roll down and out and collect more credits while keeping the shares and trade risk free around the shares. All good.
 
yobo said:
Long stock: 50.50
Long put: 2.10
Investment: 52.60
Less: .35 short put
.60 short call

Cost basis: 51.65

Market value: 51.26

Stock=50.16
Long put=1.10

40 cent differential. I call it Risk free at this point because my next move or market move makes me $$.
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Since my calls expired worthless last week, I opened a new position. Sell to open the WB 50.50 calls that expire Friday for .78 cents. Still long the stock and long the puts that expire Friday.

Next option leg will depend on what the stock does.
 
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