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I think it’s because those are so far out of the money, there is not a huge difference in value between the strikes even though they are far apart. In addition, the wide bid-ask spreads make their value ranges overlap even more. The market being closed may also skew the accuracy of the numbers.

I’m pretty certain you could never get a credit for buying a call spread, but it wouldn’t hurt to try for free money.
Thanks.

Today I watched it and I think what happens is people start panic selling the higher strike because a few times it came within a penny of each other. The interesting thing is I tried to purchase the spread for a penny and Robinhood refused to work. I clicked the submit button and it just spun like it was processing and nothing happened. It just stayed on the screen and presented the submit button again with no reason why. I then went ahead and selected a different option spread that was close but probably would never hit the penny mark and I WAS able to submit.... except there really was no chance on that particularly strike filling. Very strange. I sent in a ticket as to why the first one would not submit (I also took a video). Most likely they would have never filled anyway.
 
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I could use some education on "buying power".

I have 27k in cash in tdameritrade. I have 42 shares of stock, also worth about $27k. I also have some DITM calls I bought a long while ago, worth a few multiples of cash/stock at this point.

I sold a $450 Jun 2022 put earlier in the week (yea, regretting that, oh well) and that essentially exhausted (~1k left) my "options buying power". What I don't understand is why. I've read various pages on what buying power means. I can't get any numbers/calculations to line up. If I have 2x margin buying power with my 27k in cash, then the $450 put shouldn't exhaust it quite so badly I wouldn't think, plus I have the stock as well which should help, right?

I was thinking about selling the stock and to leverage up with LEAPs (basically why I already have DITM calls now from an earlier time), but I'm not sure if selling my stock will actually net me any more buying power because I can't figure out how it's calculated now...

Can anyone help explain things? I'm generally good with numbers and rules and such, but figuring this out has me stumped.
 
I could use some education on "buying power".

I have 27k in cash in tdameritrade. I have 42 shares of stock, also worth about $27k. I also have some DITM calls I bought a long while ago, worth a few multiples of cash/stock at this point.

I sold a $450 Jun 2022 put earlier in the week (yea, regretting that, oh well) and that essentially exhausted (~1k left) my "options buying power". What I don't understand is why. I've read various pages on what buying power means. I can't get any numbers/calculations to line up. If I have 2x margin buying power with my 27k in cash, then the $450 put shouldn't exhaust it quite so badly I wouldn't think, plus I have the stock as well which should help, right?

I was thinking about selling the stock and to leverage up with LEAPs (basically why I already have DITM calls now from an earlier time), but I'm not sure if selling my stock will actually net me any more buying power because I can't figure out how it's calculated now...

Can anyone help explain things? I'm generally good with numbers and rules and such, but figuring this out has me stumped.

Page 11 has the formulas: https://www.tdameritrade.com/forms/AMTD086.pdf

Brokerages are also raising the margin requirements on TSLA, which may be part of the issue.
 
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I could use some education on "buying power".

I have 27k in cash in tdameritrade. I have 42 shares of stock, also worth about $27k. I also have some DITM calls I bought a long while ago, worth a few multiples of cash/stock at this point.

I sold a $450 Jun 2022 put earlier in the week (yea, regretting that, oh well) and that essentially exhausted (~1k left) my "options buying power". What I don't understand is why. I've read various pages on what buying power means. I can't get any numbers/calculations to line up. If I have 2x margin buying power with my 27k in cash, then the $450 put shouldn't exhaust it quite so badly I wouldn't think, plus I have the stock as well which should help, right?

I was thinking about selling the stock and to leverage up with LEAPs (basically why I already have DITM calls now from an earlier time), but I'm not sure if selling my stock will actually net me any more buying power because I can't figure out how it's calculated now...

Can anyone help explain things? I'm generally good with numbers and rules and such, but figuring this out has me stumped.

Not sure about the exact figures and calculations, I think there’s probably some complex formula they use. But essentially, that put requires $45k to cover, which used my most of your margin. TSLA stock doesn’t really help because in a steep decline your stock will decline, too, and you might be forced to cover/sell at lows.

I only sell puts if I have cash to cover. If you can get $45k cash in there, the put will be completely covered without margin and you’ll have the luxury of waiting for a good time to buy back as time decay works in your favor.
 
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High level question. When do you guys decide to sell your profitable options (calls)? Are there certain movements you look for, do you still hold if you still think the stock will be well above your strike, or is there a certain ROI you aim for?

I have a spread of calls (mostly call debit spreads) from July out to June 2022. My June 2022 call debit spreads has 1 fairly in the money (by about 150) and the other out of the money by about $400. Both have a return of about $1500 as of today. I fully expect both to be in the money well before expiration, but I'm still learning about theta decay.

Thanks!
 
When the stock was lower, I'd sell a put in lieu of a buy order at a specific price. If it didn't hit it, I pocketed the cash, if it did, I got the cash and the stock I would have bought anyway at that price. Win/win.

However, the stock is so high now I can't sell a single put option anymore (a reason I'd favor a stock split, let's the smaller folks in on such things). Well, I can, at crazy low strike numbers like $450, but that's almost pointless.

So, is there some combination of trades that would let me do the equivalent of a selling a put at $750 or some such? I've got about $30k in cash, which until a few months ago was more than sufficient to sell a put :)
 
When the stock was lower, I'd sell a put in lieu of a buy order at a specific price. If it didn't hit it, I pocketed the cash, if it did, I got the cash and the stock I would have bought anyway at that price. Win/win.

However, the stock is so high now I can't sell a single put option anymore (a reason I'd favor a stock split, let's the smaller folks in on such things). Well, I can, at crazy low strike numbers like $450, but that's almost pointless.

So, is there some combination of trades that would let me do the equivalent of a selling a put at $750 or some such? I've got about $30k in cash, which until a few months ago was more than sufficient to sell a put :)
Same. People poo poo the idea but if the stock split 4x it would make my options trading much easier. It won't let you acquire shares, but what about a put spread?
 
Same. People poo poo the idea but if the stock split 4x it would make my options trading much easier. It won't let you acquire shares, but what about a put spread?
As something like in sell a $750 put and buy a $700 put?

That would certainly be a way to make money on the stock not dropping while capping losses. Curious if ameritrade would let me do that or not. As you noted, not really the same though :(

With selling a put that gets exercised, I don't really ever take a loss as long as I hold the stock long enough. And I can turn around and sell calls on the same stock once I've picked it up. Useful for that percentage of my holdings that's not in HODL mode.

I'd love to sell a put for 30 shares :). To bad you can't buy/sell partial options like you can with some places on partial stocks.
 
As something like in sell a $750 put and buy a $700 put?

That would certainly be a way to make money on the stock not dropping while capping losses. Curious if ameritrade would let me do that or not. As you noted, not really the same though :(

With selling a put that gets exercised, I don't really ever take a loss as long as I hold the stock long enough. And I can turn around and sell calls on the same stock once I've picked it up. Useful for that percentage of my holdings that's not in HODL mode.

I'd love to sell a put for 30 shares :). To bad you can't buy/sell partial options like you can with some places on partial stocks.
Yeah. I do call spreads like that a fair amount now. Granted I don't know what I'm doing, but it seems a way to get into more options than I could afford otherwise along with less risk and capping profit.
 
I’m thinking about doing the following: For the June 2022 options it looks like one 1200 call is about the same price as two 1800 calls. So I could buy one 1200 call and sell two 1800 calls, for no money down.

If, by June 2022 we’re below 1200 I simply break even. If we’re at 1800 I make 60K. If we’re at 2400 I again break even. The only downside is that if we’re above 2400 I have to part with 100 shares while pocketing 240K. I’m okay with that, since that’s probably the right time to diversify a little bit anyway.

Is this a reasonable thing to do, or am I missing something here?
 
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I’m thinking about doing the following: For the June 2022 options it looks like one 1200 call is about the same price as two 1800 calls. So I could buy one 1200 call and sell two 1800 calls, for no money down.

If, by June 2022 we’re below 1200 I simply break even. If we’re at 1800 I make 60K. If we’re at 2400 I again break even. The only downside is that if we’re above 2400 I have to part with 100 shares while pocketing 240K. I’m okay with that, since that’s probably the right time to diversify a little bit anyway.

Is this a reasonable thing to do, or am I missing something here?

That's a covered call ratio spread. Ratio Spread Definition

One note, your shares can be taken once the stock price is above 1,800 on the covered call you sold. If you buy back before a share price of 2,400 your position remains the same plus cash (assuming tax free account).
 
That's a covered call ratio spread. Ratio Spread Definition

One note, your shares can be taken once the stock price is above 1,800 on the covered call you sold. If you buy back before a share price of 2,400 your position remains the same plus cash (assuming tax free account).
Thanks. Early exercise is a risk, I guess, and as always one should think about taxes.

Now try to talk me out of doing this.
 
Thanks. Early exercise is a risk, I guess, and as always one should think about taxes.

Now try to talk me out of doing this.

I'd think about this as two separate trades: A 1200-1800 call spread and an 1800 covered call. If you were to just buy the call spread, you'd be looking at a cost of about $5k to get up to $60k without risking your shares. I personally wouldn't sell a covered call on TSLA that far out but everyone has their own situation.
 
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Hello, I'm new to options. There's something I don't understand : if i buy an option, can I sell it and make profit if the option isn't in the money? If the price of the option increase and I sell it without it being in the money, am I obliged to pay for it if the new buyer exercice it?
From what I understand it's not the case, but it's not clear.
Thanks in advance!
 
Hello, I'm new to options. There's something I don't understand : if i buy an option, can I sell it and make profit if the option isn't in the money? If the price of the option increase and I sell it without it being in the money, am I obliged to pay for it if the new buyer exercice it?
From what I understand it's not the case, but it's not clear.
Thanks in advance!

Yes, you can buy an option and then sell it at any time before expiry (for profit or loss).
You only have obligations if you write options.
 
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I'd think about this as two separate trades: A 1200-1800 call spread and an 1800 covered call. If you were to just buy the call spread, you'd be looking at a cost of about $5k to get up to $60k without risking your shares. I personally wouldn't sell a covered call on TSLA that far out but everyone has their own situation.
That’s an interesting argument. But ultimately I think you do have to look at the ratio spread as one trade. (And indeed, consider your whole portfolio when trading.) I could make the same argument about a regular vertical spread, that you should think of it as two separate trades as well, and then say that the selling of the upper leg by itself doesn’t make sense.

I decided to go ahead. I even got a small credit for the trade. It boils down to my belief that a stock price between 1200 and 2400 in June 2022 is quite likely, and a stock price above 2400 is unlikely. And that if the stock price by some miracle is above 2400 in June 2022 I will be very happy anyway.

(It’s nice to be here on this thread instead of the main thread. I feel like I can hear myself think.)
 
That’s an interesting argument. But ultimately I think you do have to look at the ratio spread as one trade. (And indeed, consider your whole portfolio when trading.) I could make the same argument about a regular vertical spread, that you should think of it as two separate trades as well, and then say that the selling of the upper leg by itself doesn’t make sense.

I decided to go ahead. I even got a small credit for the trade. It boils down to my belief that a stock price between 1200 and 2400 in June 2022 is quite likely, and a stock price above 2400 is unlikely. And that if the stock price by some miracle is above 2400 in June 2022 I will be very happy anyway.

(It’s nice to be here on this thread instead of the main thread. I feel like I can hear myself think.)

I don’t think about it as “one trade” because you’re actually involving 100 shares from a previous transaction to cover one of your sold 1800s. That’s an independent decision from also selling the call spread. If you were also purchasing the 100 shares at the same time, maybe I’d see it differently.

My basic point was just that you could still profit from your belief by buying the call spread without also selling the share-covered call, as long as you had another way to come up with the cash. On the other hand, if the stock keeps dropping, you can buy back one of your 1800s at a profit now.
 
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I wanted to buy OTM options to increase my leverage, but they're just so expensive right now.

So instead I'm selling options, in a mostly delta neutral way. Surely the IV must go down one of these days. Until it does, I'm okay as long as the stock price doesn't go below 100 or so or shoot up too far. If it does shoot up before I can adjust I'll have to give up a few shares. But I'm willing to make that sacrifice. :D