Newbie Options Trading

[Mario Kadastik]

Ok, interesting case today. I held two UVXY calls last night and overnight the UVXY did a reverse split 4:1. Now this morning my two calls (as there wasn't enough calls to merge them into a new call) are called UVXY2 basket at the old strike price etc. My broker told me that this is really an exceptional case and those basket instruments will probably have an order of magnitude less liquidity and had I had a standard investment account they'd have bought those out "at a fair price".

Any recommendations on what to do with those calls? They were for Feb 14th expiration at strike 15 and UVXY itself has gone up $4.3 (i.e. $1.09 pre-split) bringing me nicely in the green. Do you think the basket books will trade in sync with UVXY, will there be enough liquidity or should I just try to close the positions at market open and roll into the new UVXY? Never lived through a reverse split before so kind of new to this while not new to options trading

 

[InTheShadows]

Ok, interesting case today. I held two UVXY calls last night and overnight the UVXY did a reverse split 4:1. Now this morning my two calls (as there wasn't enough calls to merge them into a new call) are called UVXY2 basket at the old strike price etc. My broker told me that this is really an exceptional case and those basket instruments will probably have an order of magnitude less liquidity and had I had a standard investment account they'd have bought those out "at a fair price".

Any recommendations on what to do with those calls? They were for Feb 14th expiration at strike 15 and UVXY itself has gone up $4.3 (i.e. $1.09 pre-split) bringing me nicely in the green. Do you think the basket books will trade in sync with UVXY, will there be enough liquidity or should I just try to close the positions at market open and roll into the new UVXY? Never lived through a reverse split before so kind of new to this while not new to options trading

Do you have the capital to exercise them? If there was no liquidity to them and they were in the green enough to cover the transaction costs I would consider exercising them, then selling the shares or holding them if you want some common in them. After all we are taught to never buy more options than we can afford common right

 

[Mario Kadastik]

Do you have the capital to exercise them? If there was no liquidity to them and they were in the green enough to cover the transaction costs I would consider exercising them, then selling the shares or holding them if you want some common in them. After all we are taught to never buy more options than we can afford common right

I do have the capital, but at current price it's not worthwhile to exercise. It would have been actually at the time I wrote the original post, but since then the stock has come down some and now it's not anymore as profitable. I would end up with 50 shares @ $60 and it's trading at 63.5 so I would make immediately turning it around $175 which is effectively the value of 1 contract that I paid so 50% loss. If it were still 67, then it would be break even so I'll have to think.

 

[Mario Kadastik]

There was / is no liquidity. Bid/ask spread is 0.1/4.85. Ended up exercising and selling near 67 so essentially zero sum game, but it did screw my original strategy...

 

[Mitthrawnuruodo]

Mario, I bought some UVXY Jan 31st's yesterday, same problem I got the UVXY2 (I am with Tradeking). I called in and ended up selling them for a triple on market order (grr i just wanted out). Options chains are messed up on it everywhere so I dont know what I could have gotten. I immediately switched to VXX Jan31st options which were up 70% by end of day, holding until monday or tuesday.

Really weird, if they hadn't have done the stock split im convinced I would have made out like a thief, I sold them when the stock was up 11% and it closed up 17%.

 

[jshintak]

I've been lurking for a while and have been doing option trading for a few months now. Thanks to everyone who posts as I've gleaned quite a bit but I still have much to learn.

I bought AAPL 500 puts in advance of earnings today. After their report the stock dropped a bunch, even getting down very near the money (around 501 or so). I was not able to sell options after hours and I was just wondering if this is standard or if it varies by brokerage. Thanks in advance for any help.

 

[DaveT]

I've been lurking for a while and have been doing option trading for a few months now. Thanks to everyone who posts as I've gleaned quite a bit but I still have much to learn.

I bought AAPL 500 puts in advance of earnings today. After their report the stock dropped a bunch, even getting down very near the money (around 501 or so). I was not able to sell options after hours and I was just wondering if this is standard or if it varies by brokerage. Thanks in advance for any help.

You'll need to wait for standard trading hours to trade options.

 

[mershaw2001]

Instead of selling the options, you can trade shares in after hours to hedge the puts that you hold. Now that apple has moved in your favor, if you like the 508 price and don't want to worry about it rising tomorrow, and you are holding a put, then buy 100 shares of AAPL after hours. Tomorrow, close both positions. Even if AAPL recovers, you'll be delta neutral because the 100 shares gain as the put loses value and vice versa. Don't exercise the put to settle the trade, as you lose the time premium. Instead, just sell the shares and sell the put within a minute and you'll make off fine.

 

[jshintak]

DaveT - Thanks

Instead of selling the options, you can trade shaers in after hours to hedge the options. If you like the 508 price, and you are holding a put, then buy 100 shares of AAPL after hours. Tomorrow, close both positions, but you'll be delta neutral in case apple recovers. Don't exercise the put to settle the trade, as you lose the time premium. Instead, just sell the shares and sell the put within a minute and you'll make off fine.

Thanks. Good tip.

 

[FluxCap]

I just "rolled" my Jan15 180 LEAPS into Jan15 245's and cashed out some Feb14 190's for a tidy profit that paid for my new LEAPS. Today's increase happened sooner than I thought before earnings, so couldn't resist locking in some gains and getting more aggressive for the long-term while reducing my short-term exposure. Anyone else have LEAPS that are way OTM, or am I just a wild and crazy guy?

 

[InTheShadows]

Man, 245, that's just crazy!!! My highest is 240

 

[772]

I bought the Jan 15 150s when the stock was in the 140s... in retrospect I should have bought at a higher strike. I'm considering rolling the strike price up on these, probably to 200 or 250.

 

[FluxCap]

Man, 245, that's just crazy!!! My highest is 240

I'm betting Elon can deliver at least 50 points in a year's time -- that's 4 more earnings reports, you know? Feels like an eternity in Tesla-time .

 

[kenliles]

I just "rolled" my Jan15 180 LEAPS into Jan15 245's and cashed out some Feb14 190's for a tidy profit that paid for my new LEAPS. Today's increase happened sooner than I thought before earnings, so couldn't resist locking in some gains and getting more aggressive for the long-term while reducing my short-term exposure. Anyone else have LEAPS that are way OTM, or am I just a wild and crazy guy?

Sorry for the upstage Flux, but I've been holding J15 $250 and $300 for a while ( bought at TSLA $140 or so )

 

[FluxCap]

Sorry for the upstage Flux, but I've been holding J15 $250 and $300 for a while ( bought at TSLA $140 or so )

BOOM! Headshot.

 

[sleepyhead]

I just "rolled" my Jan15 180 LEAPS into Jan15 245's and cashed out some Feb14 190's for a tidy profit that paid for my new LEAPS. Today's increase happened sooner than I thought before earnings, so couldn't resist locking in some gains and getting more aggressive for the long-term while reducing my short-term exposure. Anyone else have LEAPS that are way OTM, or am I just a wild and crazy guy?

When TSLA was at $120, I was loading up on the J16's from $210 to $260. Mostly the $260's, which was the max available. I was buying those for $12.

Ah, the good old days! I went from virtually zero TSLA exposure to 50% of my portfolio back then.

 

[kenliles]

When TSLA was at $120, I was loading up on the J16's from $210 to $260. Mostly the $260's, which was the max available. I was buying those for $12.

Ah, the good old days! I went from virtually zero TSLA exposure to 50% of my portfolio back then.

I remember that well sleepy. Excellent move, and influenced my decision though funds for my move had to wait , by then TSLA was at $140 or so. I loaded up a bunch of J16 $250 strike to add to the J16 $170 strike's which I bought last dec I think when $170 was the highest strike available. I recently rolled those up on a dip to join the new $250s.

Flux- that headshot may be to my own if Tesla doesn't perform. Oh well, this old noggin could probably use a smack or 3!
Good luck to all of us

 

[c041v]

Interesting that the J16's only go to $340 while the J15's max at $380. At $300/contract for the latter, I'm just not that speculative anymore. Long gone are the days when you could get $100 OTM contracts for like $50. <sigh>

 

[sleepyhead]

Interesting that the J16's only go to $340 while the J15's max at $380. At $300/contract for the latter, I'm just not that speculative anymore. Long gone are the days when you could get $100 OTM contracts for like $50. <sigh>

When I was buying my J16 $260's, those were the highest strike prices available in December. As stock price goes up, new higher strikes become available.

 

[kenliles]

When I was buying my J16 $260's, those were the highest strike prices available in December. As stock price goes up, new higher strikes become available.

true- when the J16 first came available (nov I think) $170 was the highest strike which why I had those (recently rolled up), even though much higher strikes were available for J15. I was a little surprised at the time, but my guess was the market maker just doesn't want to price them low enough, so they leave em off