Why will this not work?

[taowave]

Your heart is in the right place..Im think I may be getting trolled

Don't be too hard on @clell888. Guy's heart is in the right place. Just need some help from you pros.

I remembered back in 2013, I thought there was a "can't lose" way writing options: I sell calls, and if called, I turn around and sell puts, and if put the stocks, I turn around and sell calls again..... I gave it a try.

 

[PoopyDeek]

The way I figure it, TSLA covered calls are bulletproof right now.
$750.09.
3/13 100 call bid $650.30.
TSLA could fall to $100 and there would be $20 profit.

Sell the put. Please dont breed.

 

[PoopyDeek]

The Dunning Kruger shit is over expressed in vol-mkts. What else is there to state but lol.

 

[taowave]

Is thats what happening here??

Guy won't place a stop on his short call,but will overhedge by 100 percent after TSLA runs up 80 points?

The Dunning Kruger shit is over expressed in vol-mkts. What else is there to state but lol.

 

[clell888]

It is like a covered call, but with an order to buy the stock when it moves up to a stop instead of already owning the stock.

The option that would be sold was Apr 3 tsla $840c $41.95

Yes my first post had the incorrect date and mixed prices.

Yes I would buy 100 shares of the stock at $830. I would have a stop order in place at $830.(does not protect against gap ups). If my short call gets exercised at $840 I will have bought the stock at a lower price if possible.

Break even - buy 100 shares of stock at $881. Sell due to exercise at $840. Loss on stock equals income from selling call.
Why is this not correct?

No intention of trying to buy call to close position.

 

[ironchef]

Im think I may be getting trolled

No sir.

 

[taowave]

Why would you buy 100 shares at 830???

You are flipping from a naked short 840 call at 750 to a naked short 840 put at 830??? Without looking at a screen,you are flipping from a short 25 delta to a long 50 delta if the stock runs up to 830..

Makes no sense..

Your breakeven analysis is very confusing.How are you buying 100 shares of stock at 881?? I yhink you mean you breakeven on the naked short call at 881.95..

FWIW,you will blow up

The option that would be sold was Apr 3 tsla $840c $41.95


Yes I would buy 100 shares of the stock at $830. I would have a stop order in place at $830.(does not protect against gap ups). If my short call gets exercised at $840 I will have bought the stock at a lower price if possible.

Break even - buy 100 shares of stock at $881. Sell due to exercise at $840. Loss on stock equals income from selling call.
Why is this not correct?

No intention of trying to buy call to close position.

 

[PoopyDeek]

Why would you buy 100 shares at 830???

You are flipping from a naked short 840 call at 750 to a naked short 840 put at 830??? Without looking at a screen,you are flipping from a short 25 delta to a long 50 delta if the stock runs up to 830..

Makes no sense..

Your breakeven analysis is very confusing.How are you buying 100 shares of stock at 881?? I yhink you mean you breakeven on the naked short call at 881.95..

FWIW,you will blow up

Yeah, worst possible outcome. Sell a delta-combo for $50 instead of $200.

 

[clell888]

Thank you for your patience trying to understand this.

I would have a buy order on the actual stock at 830 for 100 stocks.(stop order)

If my short option call gets exercised at 840 I will own the stock that I now have to sell.

The naked short call break even is the same as getting exercised and buying the stock.
If I buy the stocks at 881 I have to sell at 840 for a loss of $41 per share which is the same as I sold the call option.

It is a covered call, but instead of owning the stock I plan to buy it if necessary below the short call strike price.

No downside risk as I do not own the stock. Try to avoid upside risk of naked short call with order to buy stock if you approach strike price.

thanks

 

[zoned_post_meridiem]

Thank you for your patience trying to understand this.

I would have a buy order on the actual stock at 830 for 100 stocks.(stop order)

If my short option call gets exercised at 840 I will own the stock that I now have to sell.

The naked short call break even is the same as getting exercised and buying the stock.
If I buy the stocks at 881 I have to sell at 840 for a loss of $41 per share which is the same as I sold the call option.

It is a covered call, but instead of owning the stock I plan to buy it if necessary below the short call strike price.

No downside risk as I do not own the stock. Try to avoid upside risk of naked short call with order to buy stock if you approach strike price.

thanks

Again, your $ risk is in gap up (your buy stop gets filled at $860, e.g) or quick gap down after you’ve already purchased the shares (TSLA inches against you, your buy stop triggers at $830 as intended, then drops overnight to 700). It’s TSLA — the reason you’re getting that kind of premium on your short call is because it CAN move a lot very quickly.

I get what you’re trying to do, I just think you’re underestimating the volatility risk behind it.