when do i see the profits?

M

Mdtbyk

Hello

thanks again all for your amazing help and advice

i would like to know when i sell a call/put so i basiclly am making money by selling it but when do i actually see the profit in my statements only when it expires?

because i am trading the ES and i was Long ES at 2590 and i wasn't sure where the market is heading so i sold one ES call at 2595 now the market made a big run ahead so i was thinking to sell the ES future and buy instead a call which will leave me with a nice spread.

but now the short is -1000$ but if i wait till expiry ill get 1200$ so when do i see that profit?
 
If the market keeps going up you will get killed! The negative grand you are seeing is how much you are down on the trade.

Pray, hope or get flat!
 
For future reference, if you buy a put your down side is limited. Selling calls in a rising market limits your upside and leaves your risk unlimited.
 
johnnyrock said:
If the market keeps going up you will get killed! The negative grand you are seeing is how much you are down on the trade.

Pray, hope or get flat!
More...
OP has a covered call, so worst case OP makes less than holding the underlying, unless OP wants to keep the underlying and buys back the short call.

To OP, look at whether it makes sense to roll the short to a later expiration.
 
Mdtbyk said:
but now the short is -1000$ but if i wait till expiry ill get 1200$ so when do i see that profit?
More...
If you buy back the short now, it will cost you $1000 more than you collect. If you wait till expiry, and if the underlying is below strike, you luck out and indeed will collect the @1200. But if the underlying is above strike your underlying will be called and your investment likely will return less than just holding the underlying.

Someone on ET taught me to watch my gamma carefully when short, especially naked shorts. Fortunately you are not naked.
 
Actully, I was wondering something similar. When one has a covered call and the stock goes up, is there a way to lock in the call premiums, in case the stock drops back?
 
Pekelo said:
Actully, I was wondering something similar. When one has a covered call and the stock goes up, is there a way to lock in the call premiums, in case the stock drops back?
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Tongue firmly planted in cheek.
 
Mdtbyk said:
Hello

thanks again all for your amazing help and advice

i would like to know when i sell a call/put so i basiclly am making money by selling it but when do i actually see the profit in my statements only when it expires?

because i am trading the ES and i was Long ES at 2590 and i wasn't sure where the market is heading so i sold one ES call at 2595 now the market made a big run ahead so i was thinking to sell the ES future and buy instead a call which will leave me with a nice spread.

but now the short is -1000$ but if i wait till expiry ill get 1200$ so when do i see that profit?
More...

At expiry.
 
Pekelo said:
Actully, I was wondering something similar. When one has a covered call and the stock goes up, is there a way to lock in the call premiums, in case the stock drops back?
More...

Not sure that I follow you. If you sell an OTM covered call and the stock rises well above the strike, the call appreciates and it could have a significant loss. Net net, it doesn't matter since whatever intrinsic value the short call has (loss) is offset by the stock's appreciation above the strike. So there is no way to "lock in the call premiums, in case the stock drops back".

If you're looking to play that pull back scenario, you book the larger gain on the stock and hold the naked call. If unwilling to be naked (as most should be), convert it to a bearish call spread. You could give back some profit if the stock continues rising but if it drops, you capture all of the short call's value less the cost of the cheaper long call.
 
spindr0 said:
Not sure that I follow you. If you sell an OTM covered call and the stock rises well above the strike, the call appreciates and it could have a significant loss. Net net, it doesn't matter since whatever intrinsic value the short call has (loss) is offset by the stock's appreciation above the strike. So there is no way to "lock in the call premiums, in case the stock drops back".

If you're looking to play that pull back scenario, you book the larger gain on the stock and hold the naked call. If unwilling to be naked (as most should be), convert it to a bearish call spread. You could give back some profit if the stock continues rising but if it drops, you capture all of the short call's value less the cost of the cheaper long call.
More...
As for now I’m down on selling the call 1000$ and the premium is 1200$ on selling the call ,
Let’s say the market stays at its price at time of expiry do I get 1200$ in my account ?
 
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