Welcome to Tesla Motors Club
Discuss Tesla's Model S, Model 3, Model X, Model Y, Cybertruck, Roadster and More.
Register

Noob option trading questions

If the stock went from 1825 to 1800 on the day of exipry, your position goes from max profit to max loss.
Not advice:
There's nothing inherently wrong with that spread and has the pluses you call out. However, it doesn't return much in the short term. And in the situations where it does, other positions have better returns.

Alternatively, you can do a put spread for a credit and recieve premium now which the account needs to keep to cover the $2,500 at risk, but you can use some of that to buy other positions. Like 2 shares of TSLA which would gain an additional $1,800+ if the options expire OTM.
TSLA Put Spread calculator
Ok, i compared the put spread and the call spread on the calculator and on optionstrat .
1. The puts BOTH have much lower volume , lots of them have volume of 0 !
2. Profit seems to be 100% , vs 3300% on the call spread.
3. Lets add in the additional 1800 : still about 200 % vs 3300 %

What am i not seeing mongo ???

Peter
 

mongo

Well-Known Member
May 3, 2017
14,762
50,806
Michigan
Ok, i compared the put spread and the call spread on the calculator and on optionstrat .
1. The puts BOTH have much lower volume , lots of them have volume of 0 !
2. Profit seems to be 100% , vs 3300% on the call spread.
3. Lets add in the additional 1800 : still about 200 % vs 3300 %

What am i not seeing mongo ???

Peter
1. Was just speaking to general position type, didn't check OI or Vol
2. Put spread pays out 2,135 on 2,500 at risk, $365 worst case loss, so ~6x return. The call return % varies greatly depending on the opening price.

SmartSelect_20220117-154101_Firefox.jpg
 
Ok, I am starting to get your point !

Now , how to compare these 2 "öptions" ????

Call Spread:
1. Investment : about -72 debit
2. Max return: about 2400
3. Prob. and BE are same
4. Volume : higher than Put Spread
5. Max loss: -72
6. ROI : about 33X

Put Spread:
1. Investment : about 2135 credit
2. Max return: about 2135
3. Prob. and BE are same
4. Volume : much lower than Call Spread
5. Max loss: -365
6. ROI : Don't know how to calculate this , because you start with a net credit , but you list about 600% , so about 6X


Mongo , on the face , it looks like the put spread is better, because you could buy 10 of these put contracts and have 21350,- to play with
for (extra) investment .

Looks too good to be true , what am i missing ???
 

Products we're discussing on TMC...

About Us

Formed in 2006, Tesla Motors Club (TMC) was the first independent online Tesla community. Today it remains the largest and most dynamic community of Tesla enthusiasts. Learn more.

Do you value your experience at TMC? Consider becoming a Supporting Member of Tesla Motors Club. As a thank you for your contribution, you'll get nearly no ads in the Community and Groups sections. Additional perks are available depending on the level of contribution. Please visit the Account Upgrades page for more details.


SUPPORT TMC
Top