Newbie Options Trading

[CyberDutchie]

What's the best strategy going into the last week before expiration with OTM calls?

I'm still holding my Dec 21 160 calls which are worth .66 cents at the moment but have fluctuated quite a bit. They tend to move up a lot the moment TSLA makes a decent run, but move down just as quickly when the run ends.

Selling at current bid would give me 3 cents on the dollar.

From your experience, what can be expected just days before expiration if TSLA moves up closer to the strike price, but still not ITM (e.g. what will happen to the time premium if they've moved to $150 by next Wednesday)? How would an experienced options trader time it?

 

[InTheShadows]

What's the best strategy going into the last week before expiration with OTM calls?

I'm still holding my Dec 21 160 calls which are worth .66 cents at the moment but have fluctuated quite a bit. They tend to move up a lot the moment TSLA makes a decent run, but move down just as quickly when the run ends.

Selling at current bid would give me 3 cents on the dollar.

From your experience, what can be expected just days before expiration if TSLA moves up closer to the strike price, but still not ITM (e.g. what will happen to the time premium if they've moved to $150 by next Wednesday)? How would an experienced options trader time it?

I would dump them right away. All that's left is time value and it is extremely unlikely that they will
Be worth anything at expiration.

 

[ckessel]

I have some January SOL options that are so far worthless that there are no takers even at the minimum price (TD requires nickel increments). I want to close the position though and take the loss in 2013, but if no one is buying, is that possible?

 

[sleepyhead]

I have some January SOL options that are so far worthless that there are no takers even at the minimum price (TD requires nickel increments). I want to close the position though and take the loss in 2013, but if no one is buying, is that possible?

Lol! I was going to post this exact same question with the exact same options. I was wondering if I could give away the options or something to take the loss. I am even willing to pay someone to take the options off my hands, but the best I can do is put in a "market order" and there are no buyers.

Any ideas?

 

[chillong]

if you have a second account somewhere, you could buy them just by yourself with the second account. Thats what i tried once with my IB accounts.

Edit: Depends ofc of the usual ask and bid's. If the incremental is 5 cent and there are no ask's on 5 cent, then it can work. Otherwise you risk buying it from someone else

 

[sleepyhead]

if you have a second account somewhere, you could buy them just by yourself with the second account. Thats what i tried once with my IB accounts.

Edit: Depends ofc of the usual ask and bid's. If the incremental is 5 cent and there are no ask's on 5 cent, then it can work. Otherwise you risk buying it from someone else

That is the definition of Wash Sale right there. Next?

 

[ckessel]

That is the definition of Wash Sale right there. Next?

Yep, pretty sure. The wash sale examples specifically call out selling from one account and buying the same thing in another.

 

[chillong]

well, luckily these kind of restrictions don't affect me. Didn't know about this Wash rule, learned something new. Lucky to live in a place where you don't have to worry about tax on capital gains...

I would try calling my broker in this case, there might be a solution.

 

[Mario Kadastik]

Well I have no tax consequences either so I could easily buy them off you and sell them back to you next year or just take the hit and let you guys wire me over some dough (through bitcoins maybe) But it's tough to make sure that they ones being bought are yours

 

[luvb2b]

"cabinet" fills

I have some January SOL options that are so far worthless that there are no takers even at the minimum price (TD requires nickel increments). I want to close the position though and take the loss in 2013, but if no one is buying, is that possible?

in the old days there was something you could get a "cabinet fill" on the exchange floors. these trades were executed at something like 0.01 or less just to facilitate clearing out of positions.

the cboe still has this facility i think. see
https://www.cboe.org/publish/regcir/rg08-170.pdf

you would probably need to call your options desk and ask them to help facilitate getting a cabinet fill on one of the exchanges.

 

[pahar103]

Which brokers do you guys use to trade options to keep transaction fees low?
I am using Schwab and it's ~10$ Per transaction, which seems a little high.

 

[chillong]

Which brokers do you guys use to trade options to keep transaction fees low?
I am using Schwab and it's ~10$ Per transaction, which seems a little high.

I am using Interactive Brokers, commission between 0.25 and 0.7 per contract.

 

[Mario Kadastik]

I am using Interactive Brokers, commission between 0.25 and 0.7 per contract.

You must trade a lot, I also use IB and after arguing with my local banks contact they lowered my options fees from $4 to $2 because I was trading enough. Going below that will be tougher, especially as I don't trade as much anymore

 

[jkliu47]

I am using Interactive Brokers, commission between 0.25 and 0.7 per contract.

Is that in Euros?

Interactive Brokers in US charges $1.00 per option contract transaction. As does Tradestation, also $1/contract or as low as $4.99 to $9.99/trade plus $0.20/contract depending on volume of trades/month.

Check with their respective websites for specific details.

 

[chillong]

You must trade a lot, I also use IB and after arguing with my local banks contact they lowered my options fees from $4 to $2 because I was trading enough. Going below that will be tougher, especially as I don't trade as much anymore

Not really, still well below the threshold for the highest commission bracket (which is 10'000 monthly) .
Rates are here: https://www.interactivebrokers.com/en/index.php?f=commission&p=options1#america

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Is that in Euros?

Interactive Brokers in US charges $1.00 per option contract transaction. As does Tradestation, also $1/contract or as low as $4.99 to $9.99/trade plus $0.20/contract depending on volume of trades/month.

Check with their respective websites for specific details.

well, they charge you 1$ minimum per trade, but not per contract!

 

[ckessel]

Lol! I was going to post this exact same question with the exact same options. I was wondering if I could give away the options or something to take the loss. I am even willing to pay someone to take the options off my hands, but the best I can do is put in a "market order" and there are no buyers.

Any ideas?

FYI, I emailed TDAmeritrade's customer service and they said if I called they'd execute a trade for all the options for a total of $1 as a way to unload them, but there's no way to do it via email or web interfaces.

 

[sleepyhead]

FYI, I emailed TDAmeritrade's customer service and they said if I called they'd execute a trade for all the options for a total of $1 as a way to unload them, but there's no way to do it via email or web interfaces.

Thanks. I am with IB and I will give them a call.

I actually thought of an idea to unload them, but too late. I have the SOL Jan14 $7's and obviously there are no buyers for it. What I should have done was to put in an order for a diagonal spread:

Buy SOL Dec $3
Sell SOL Jan $7

This would have solved the problem. If I had thought about this sooner, I would have put in that order as soon as SOL filled the gap at $2.89; and would have made a nice return on it as well.

Keep this in my mind for next time though.

 

[ckessel]

Thanks. I am with IB and I will give them a call.

TD Ameritrade did the trade for me today. It is a "cabinet" trade as a fellow mentioned above and it took the TD Ameritrade rep a while to figure out how to make that happen. He said it wouldn't show up until tomorrow, so the point here is to make sure you give IB at least a day to make it happen if you want to make sure it happens in 2013!

 

[ckessel]

Question for the knowledgable related to taxes.

I have one underwater position right now (about -30%), which is a 2015 LEAPS in SPWR. While it's a 2015 precisely because I wanted to be long, as the tax year closes I'm wondering if makes sense to sell now and write the loss against the various TSLA profits I took this year. I suppose the big question is will SPWR move up within the next 30 days more than I'll save in taxes. No one knows of course, I'm just trying to weigh my options (no pun intended).

 

[ggr]

Question for the knowledgable related to taxes.

I have one underwater position right now (about -30%), which is a 2015 LEAPS in SPWR. While it's a 2015 precisely because I wanted to be long, as the tax year closes I'm wondering if makes sense to sell now and write the loss against the various TSLA profits I took this year. I suppose the big question is will SPWR move up within the next 30 days more than I'll save in taxes. No one knows of course, I'm just trying to weigh my options (no pun intended).

"Never let the tax tail wag the investment dog." Or something like that. You presumably bought the LEAPS because you believed in them. If you no longer believe, then now (as opposed to next week) is a good time to sell. But if you still believe, you'll be kicking yourself if they run up during January.