Newbie Options Trading

[Mario Kadastik]

Well you would retain the $185-$195 profit region, but you would be exposed to the $185-$175 region loss. The two options would balance each other out and we're talking about value at expiry. For anything in between the effect is smoothed somewhat.

 

[sub]

Well you would retain the $185-$195 profit region, but you would be exposed to the $185-$175 region loss. The two options would balance each other out and we're talking about value at expiry. For anything in between the effect is smoothed somewhat.

Ok thanks. I don't think I like that idea then. It's one thing to have some downside risk with unlimited upside, but limiting the upside while still being exposed equally to the downside doesn't seem like much fun. On to my next bad idea. I do have an idea that I think works but I've yet to find a software that will automate what I want to do because it takes to much time sitting in front of the computer but would allow me to sell covered calls with almost no downside while retaining all the upside of the stock and premium collection.

 

[Mario Kadastik]

What's the idea, might be we can shed some light on nuances that might be involved before you invest time or money in a complex software solution

 

[sub]

What's the idea, might be we can shed some light on nuances that might be involved before you invest time or money in a complex software solution

I'll PM you regarding this idea, I've mentioned it in the past but didn't get much input.

 

[NStar]

Ok thanks. I don't think I like that idea then. It's one thing to have some downside risk with unlimited upside, but limiting the upside while still being exposed equally to the downside doesn't seem like much fun. On to my next bad idea. I do have an idea that I think works but I've yet to find a software that will automate what I want to do because it takes to much time sitting in front of the computer but would allow me to sell covered calls with almost no downside while retaining all the upside of the stock and premium collection.

have you considered ladder? you can buy one or more $185-$195 call spread, and sell another OTM call say $200 or $205 to finance the call spread to make it close to zero upfront cost(need to find the proper expiration date). there will be no downside risk at all(excpet that your core position might get called away at $200 or $205), and the upside is $1000 times the number of call spread you buy per 100 common shares you hold. I've not compared the pros/cons between this and directly selling $200 or $205 put, but it sounds like you don't like the risk associated with selling puts.

 

[sub]

have you considered ladder? you can buy one or more $185-$195 call spread, and sell another OTM call say $200 or $205 to finance the call spread to make it close to zero upfront cost(need to find the proper expiration date). there will be no downside risk at all(excpet that your core position might get called away at $200 or $205), and the upside is $1000 times the number of call spread you buy per 100 common shares you hold. I've not compared the pros/cons between this and directly selling $200 or $205 put, but it sounds like you don't like the risk associated with selling puts.

I can't sell puts right now, i'm with Scottrade and they don't allow it. I was unaware of this until I tried to sell some last week when the stock hit 161, would have made a nice chunk on them as I was going to sell puts and buy calls, would be up 100%+ already. Now I have to figure out when a good time will be to transfer my positions to another broker, there really isn't a good time to be tied up for 7-10 days when dealing with TSLA.

I'm leaning towards selling Dec calls the day of or after earnings, depends on the run up the day of. The stock always pulls back afterwards, so I can sell and get the high volatility and either let them ride until they expire or buy them back at a profit when TSLA inevitably drops 10-20 bucks within a few days after earnings. I thought about also taking the money from the calls and buying puts to double up on the pull back. If we are pushing 200+ at that point, i'm not so worried about getting my shares called away at 210-220 if that is where I sell calls. The air is really thin up there and TSLA will pull back, I can pick back up my shares cheaper most likely. If not, I may pull my original investment and go elsewhere and stick my profits in TSLA Leaps and let it ride. I got in much later than a lot of people around here but I've almost doubled up. I went all in from the beginning, can't complain.

 

[aznt1217]

I can't sell puts right now, i'm with Scottrade and they don't allow it. I was unaware of this until I tried to sell some last week when the stock hit 161, would have made a nice chunk on them as I was going to sell puts and buy calls, would be up 100%+ already. Now I have to figure out when a good time will be to transfer my positions to another broker, there really isn't a good time to be tied up for 7-10 days when dealing with TSLA.

I'm leaning towards selling Dec calls the day of or after earnings, depends on the run up the day of. The stock always pulls back afterwards, so I can sell and get the high volatility and either let them ride until they expire or buy them back at a profit when TSLA inevitably drops 10-20 bucks within a few days after earnings. I thought about also taking the money from the calls and buying puts to double up on the pull back. If we are pushing 200+ at that point, i'm not so worried about getting my shares called away at 210-220 if that is where I sell calls. The air is really thin up there and TSLA will pull back, I can pick back up my shares cheaper most likely. If not, I may pull my original investment and go elsewhere and stick my profits in TSLA Leaps and let it ride. I got in much later than a lot of people around here but I've almost doubled up. I went all in from the beginning, can't complain.

You can have then upgrade your options trading level. It's literally just a form.

 

[Clemsons2k]

Question about options expiration.

I have some puts that expire Oct 19 that I can't get to sell yet. They are roughly $4 OTM right now. If they don't hit the strike price by the end of friday then they just expire and nothing happens correct? I read about automatic assignment and I don't have capital to take on the shares if they do that.

Am I good just letting them ride or should I call my broker just to make sure they don't auto assign?

 

[Mario Kadastik]

If they are OTM, then they expire worthless and nothing happens. However there's still a possibility that the stock market moves and it'll end up in the money. You know you can close the position early, right?

 

[brianman]

I have some puts that expire Oct 19 that I can't get to sell yet.

You know you can close the position early, right?

Can you elaborate? Thanks.

 

[Clemsons2k]

If they are OTM, then they expire worthless and nothing happens. However there's still a possibility that the stock market moves and it'll end up in the money. You know you can close the position early, right?

Yea I know, thats what I've been trying to do. Even set to "sell to close" at market I can't get rid of them.

 

[sub]

You can have then upgrade your options trading level. It's literally just a form.

From what ive vie read here and on the net elsewhere they don't allow anyone to sell puts, but I may be wrong. I will call them today and find out, I will report back. Would love to sell some puts right now. When I attempted to sell them the message I received is that they don't allow it at all, not just for me specifically.

 

[Mario Kadastik]

Yea I know, thats what I've been trying to do. Even set to "sell to close" at market I can't get rid of them.

That's really odd. You should be able to close a position you have. If you bought the options, then you should be able to sell them and if you sold short you should be able to buy them to close the position. If you can't I'd recommend calling your broker.

 

[Clemsons2k]

That's really odd. You should be able to close a position you have. If you bought the options, then you should be able to sell them and if you sold short you should be able to buy them to close the position. If you can't I'd recommend calling your broker.

I'm assuming I can't sell to close because nobody is willing to buy them from me. There hasn't been any volume for that particular put today.

 

[Mario Kadastik]

Do you do a limit order or a market order? There usually is at least some ask-bid bracket on almost all options, the bracket might be very wide, but ...

 

[Clemsons2k]

Do you do a limit order or a market order? There usually is at least some ask-bid bracket on almost all options, the bracket might be very wide, but ...

Its a market order. I talked with my broker and they said that it hasn't sold because there isn't a market for that particular contract today. But unless the stock price drops by $4 by the end of tomorrow it won't matter anyways as they will just expire without auto exercising.

 

[Mario Kadastik]

What contract is it out of curiosity.

 

[Clemsons2k]

What contract is it out of curiosity.

Oct19 $17 for CSIQ. I bought them earlier in the week to protect against people freaking out today if nothing was resolved in Washington.

 

[Mario Kadastik]

Yes, this particular has only Ask at 0.05 (a whopping 3168 contracts waiting) and no bids. I don't think you need to worry. But also not going to get any capital back. So just sit tight and watch CSIQ, but I seriously doubt it'll go down that much that it would give you anything back much less expire ITM.

 

[sleepyhead]

Yea I know, thats what I've been trying to do. Even set to "sell to close" at market I can't get rid of them.

That's because nobody wants to buy that junk.

Seriously, they are worthless. Why would anyone pay anything for them.

Just set a limit price of $0.05 as a "good to cancel" order and if CSIQ falls below $17 tomorrow it will get executed. Otherwise it will expire worthless. In either case, you will not be "put" the stock.