Newbie Options Trading

[Kipernicus]

That's my worry with the Aug 17 150-170's. I feel like as soon as some momentum is lost the value will rapidly drop. In that case I'd have to hope that the stock does go well above 170. Do you think the same for the Sep 21's? No major news event from now till then so feel like they will also tank fast.

This was a learning experience for me today. I bought some Aug 17 155 C last week
Today's open its price was 6.5, day's high was 8.8, and day's low was 4.63, which is pretty much where it's at right now at the end of the day when all the craziness has settled down. Conclusion: if you're looking to sell, a quick and steep jump in the price is good.

At this point I'll wait to see if Monday brings in a lot of weekend buyers and hope the price spikes again. At least I'm still positive, just not as positive as a few hours ago.

Really have to watch these things minute by minute!

 

[sahanim]

question for anyone who can answer this:

If the options chain is delayed by 15 minutes how do i determine what my option is wroth right when the stock market opens at 9:30? I'm looking to sell some aug calls and looking to take advantage of the high volatility right at the beginning of trading tomorrow. I noticed today that my options on my Scotia iTrade account didn't start fluctuating until 9:45.

 

[sleepyhead]

question for anyone who can answer this:

If the options chain is delayed by 15 minutes how do i determine what my option is wroth right when the stock market opens at 9:30? I'm looking to sell some aug calls and looking to take advantage of the high volatility right at the beginning of trading tomorrow. I noticed today that my options on my Scotia iTrade account didn't start fluctuating until 9:45.

I can answer that: you need to open a new options trading account. Not having real-time quotes is ridiculous.

 

[sahanim]

I can answer that: you need to open a new options trading account. Not having real-time quotes is ridiculous.

are there any websites that provide live options quotes?

Also, if i see crazy volatility with a decent pop. should i just place a market sell order on the options?

 

[sleepyhead]

Sorry, I don't know of any such public websites. I use my brokerage account for R-T quotes.

If you sold early this morning at $158 with a market order on options you would have done ok. I have personally never done market orders on options and I sometimes miss out on a few pennies and regret it.

 

[justdoit]

Sorry, I don't know of any such public websites. I use my brokerage account for R-T quotes.

If you sold early this morning at $158 with a market order on options you would have done ok. I have personally never done market orders on options and I sometimes miss out on a few pennies and regret it.

I'm always tempted to do market orders so that I'm guaranteed it sells but feel like I'll regret it. So just keep updating my limit order price until it sells. Kinda sucks because you miss out on rapid movements. There has to be a better way right?

 

[emupilot]

So now what? We made nice quick returns this week, but it may be a while before we have another gift-wrapped opportunity. I'd be interested in hearing various strategies for the coming 3 months or so. I'm guessing TSLA will be relatively flat overall, but it seems like some volatility is inevitable in a stock with such divergent opinion on its valuation. Of course, I also predicted TSLA would be flat when it was around 100 (so my opinion is worth what you paid for it), but I figure at some point the stock will have to take a breather and with few upcoming exciting announcements it seems like there is not much catalyst to maintain a rapid rise.

In addition to my core holding, I'm going to attempt to buy on the dips and sell 1-4 weeks later. I did a quick spreadsheet and I figure Sep 120-140 calls pretty much optimize returns on stock swings of 5-10 points. OTM calls get the best returns if you can unload them in 1-2 weeks, but the decay of time value makes them toxic if you hold them very long in a flat market. There's also the possibility that the stock will correct downward and stay there for a few weeks or months, so the deep ITMs would likely retain some value in that case. (I'm using tax-deferred funds, so my strategy doesn't have to take tax consequences into account.)

 

[Ryo]

Can anyone offer any thoughts on Sept calls? I'm holding some Sept 175's at 50% loss right now. Seems like the overwhelming opinion is that we are going to see a slow and steady climb the remaining 2 quarters. But will that growth be so slow that the option value is offset by it's accelerating time premium decay?

 

[emupilot]

Can anyone offer any thoughts on Sept calls? I'm holding some Sept 175's at 50% loss right now. Seems like the overwhelming opinion is that we are going to see a slow and steady climb the remaining 2 quarters. But will that growth be so slow that the option value is offset by it's accelerating time premium decay?

I'm staying away from OTM calls because we probably won't be running up at the rate we had been and as you say time value decay is a problem. My opinion (take it for what you paid for it) is that we'll still have volatility which will provide opportunities for option plays even if the stock is mostly moving sideways the next few months. I'm holding my Sep calls (ITM so there's not so much pressure) and hoping for a little rally within the next week to provide a better selling opportunity.

 

[Larken]

Originally Posted by Jonathan Hewitt
Oh my gosh, I just got approved to buy Calls, Puts, and sell Covered Calls. This is the worst timing ever, a day where it just went up 3% and a day before Elon's next announcement and the market is already closed so I can't do anything today. Smartest thing is for me to stay out but the temptation to get in is so strong...Maybe just buying one contract can't hurt too much, right? :wink:

Sooner or later, this will end in tears.

Haha very funny! I'm just starting to read this thread from start since I'm interested in beginning with options trading. Even though I find the above exchange hilarious, I cannot help to think there might be some seriousness to it. Everyone so far seems to warn that the risk in options is quite high.

 

[Johan]

I think right now is definately not the time to start trading options in TSLA as a newbie. It's very hard to predict the short-term volatility of TSLA, and we may also see decreased volatility for the rest of the year. Long-term I see a lot of upside, but making a good guess on when the stock will hit $200 for example, is extremely hard. This is turn makes trading long-term options hard, since timing important with LEAPS and not only the short-term options.

 

[Larken]

I think right now is definately not the time to start trading options in TSLA as a newbie. It's very hard to predict the short-term volatility of TSLA, and we may also see decreased volatility for the rest of the year. Long-term I see a lot of upside, but making a good guess on when the stock will hit $200 for example, is extremely hard. This is turn makes trading long-term options hard, since timing important with LEAPS and not only the short-term options.

Yes, I am sure you are right and timing is indeed very hard even though one might have a very bullish outlook long term. However, one has to start somewhere and I guess as a newbie one can start with adjusting the amount of risk (money) one takes. Also, I am thinking to start trading with virtual money to begin with since I cannot say I grasp enough of option trading to justify putting hard earned money on the line - yet.
But thanks for the heads up.

 

[Jonathan Hewitt]

Originally Posted by Jonathan Hewitt
Oh my gosh, I just got approved to buy Calls, Puts, and sell Covered Calls. This is the worst timing ever, a day where it just went up 3% and a day before Elon's next announcement and the market is already closed so I can't do anything today. Smartest thing is for me to stay out but the temptation to get in is so strong...Maybe just buying one contract can't hurt too much, right? :wink:

Haha very funny! I'm just starting to read this thread from start since I'm interested in beginning with options trading. Even though I find the above exchange hilarious, I cannot help to think there might be some seriousness to it. Everyone so far seems to warn that the risk in options is quite high.

It's funny looking back! Thanks for that. For the record, I've made about 700% off my initial "investment" into options, enough to get a Model S. Who would've known that would happen in only ~4 months. Beginner's luck? I agree with Johan though. I've pared down my portfolio to just stock, DITM March calls, and at the money and DITM LEAPS. I've made enough money (I have my Model S now!) and I'm still newbie enough that I don't want to play the short term options game anymore (for now at least ) Unless there is a big unjustified dip I'm staying away!

 

[Johan]

It's funny looking back! Thanks for that. For the record, I've made about 700% off my initial "investment" into options, enough to get a Model S. Who would've known that would happen in only ~4 months. Beginner's luck? I agree with Johan though. I've pared down my portfolio to just stock, DITM March calls, and at the money and DITM LEAPS. I've made enough money (I have my Model S now!) and I'm still newbie enough that I don't want to play the short term options game anymore (for now at least ) Unless there is a big unjustified dip I'm staying away!

Yup. I cashed out 800% returns since April this year. Unfortunately sitting with some OTM Aug calls still that will expire worthless and are already practically worthless, but hey, it was a calculated risk to hold a little bit but selling most in the first hour of trading after the call. I'm a happy camper here. I've learnt so much more than I could have by studying investing just in theory.

 

[Larken]

It's funny looking back! Thanks for that. For the record, I've made about 700% off my initial "investment" into options, enough to get a Model S. Who would've known that would happen in only ~4 months. Beginner's luck? I agree with Johan though. I've pared down my portfolio to just stock, DITM March calls, and at the money and DITM LEAPS. I've made enough money (I have my Model S now!) and I'm still newbie enough that I don't want to play the short term options game anymore (for now at least ) Unless there is a big unjustified dip I'm staying away!

Wonderful, congratulations. I sure wish I would have known about options back then but I was only buying stocks then. Needless to say, I have a lot to learn and my only encouragement to start learning is that I am very bullish on TSLA long term. Also congrats to you Johan for your 800% gain and hopefully more for us all to come :smile:
By the way, besides the book "The Options Playbook" that was suggested by someone, would you guys suggest any other learning device for a complete newbie?

 

[InTheShadows]

I think right now is definately not the time to start trading options in TSLA as a newbie. It's very hard to predict the short-term volatility of TSLA, and we may also see decreased volatility for the rest of the year. Long-term I see a lot of upside, but making a good guess on when the stock will hit $200 for example, is extremely hard. This is turn makes trading long-term options hard, since timing important with LEAPS and not only the short-term options.

So you think some Jan 15 $250's would be a risky play? I was thinking that before then the stock should hit at least 200 then they could be sold for a profit or rolled into something else.

 

[Jonathan Hewitt]

Wonderful, congratulations. I sure wish I would have known about options back then but I was only buying stocks then. Needless to say, I have a lot to learn and my only encouragement to start learning is that I am very bullish on TSLA long term. Also congrats to you Johan for your 800% gain and hopefully more for us all to come :smile:
By the way, besides the book "The Options Playbook" that was suggested by someone, would you guys suggest any other learning device for a complete newbie?

Thanks! As you see from my post way back when I thought it was too late then, as well, so I wouldn't take this as 100% stay away. You just have to ask yourself how much you want to risk and at what level. There are a couple ways to get in as well. For example, you can buy deep in the money LEAPS, which basically act as super stock. Whatever the stock does (up or down) it will grant you a much larger % change. As long as you are bullish I think this can be a nice way to get introduced to options.

 

[Johan]

So you think some Jan 15 $250's would be a risky play? I was thinking that before then the stock should hit at least 200 then they could be sold for a profit or rolled into something else.

I dunno. Just remember that an OTM option has no intrinsic value, only time value. The time value is determined by time left to expiration and implied volatility. So yes, you are paying $15.60 for that call today. If TSLA doesn't hit $200 until the second half of 2014 for example, and does so with just a very slow climb (none of these squeezes and post-earnings pops we've seen in the past) then the market may price the time-value on that option lower than $15.60 even though you it's quite a lot closer to the money. So there is no more easy money in TSLA right now IMO. Right now we've seen the implosion of time-value for shorter term options. If TSLA trades sideways for the coming months we will se quite an implosion in the time-value of long term options/LEAPs as well.

 

[Jonathan Hewitt]

So you think some Jan 15 $250's would be a risky play? I was thinking that before then the stock should hit at least 200 then they could be sold for a profit or rolled into something else.

Not super risky but beyond the level of risk I want right now.

 

[justdoit]

Is it just me or are call options still pretty expensive? Is it people just holding on trying to minimize their losses? Still learning about pricing.