BrownOuttaSpec
Active Member
Something like this:
Yeah, that sounds about right.
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Wiki Selling TSLA Options - Be the House
- Thread starter adiggs
- Start date
Yeah, that sounds about right.
That is correct - it is also $100 in the money on both legs a week out.... when we are already up almost $275 in the past 2 weeks.....
Not sure I would make that trade but if you do it - please let us know how it goes.
Thanks and good luck!
Pretty much, though it seems that the credit has gone down, so risk has gone up. (And the option calculator shows that there is a greater than 70% chance that it will be below $1265 and you will be at max loss.)
You are correct - that was a 50% of max loss for the position (actually had 3 of them in different accounts, that went for 40-70%), not of the premium received.
Stuff I learned:
- you are absolutely correct; I do have a lot of control over how much loss (%) that I take. I was pretty new to spreads at that point and I made the mistake of taking too big of a position with too small of a spread, not enough knowledge, and not enough smaller positions to start gaining that knowledge and experience.
- I didn't have as clear of an understanding of just how much I have control I have over the loss. BTW - Even with our relatively small steady weekly gains, I bias towards being ready to take larger % losses to give positions time to run and be rolled / managed. If I'm netting 2% / week and take the occasional 20% loss then I'm still ahead each quarter (not as much as I'd like, but still good by any other standard). 20% realized p/l losses are really rare - like 2 this year rare and I'm getting a lot better about lowering even from there.
- early days for me on spreads - I had WAY too narrow of a spread for how close to the money I chose my short call to be. Like $20 wide spread ($$ $$ dancing in my eyes) and the share price went through the midpoint so fast my head was still starting to spin. So I went with the 'take the loss' management choice when it turns out a 1 week roll for time would have been a max win (frequently the case; it's the infrequent cases that can wipe you out though depending on position sizes and management).
Closest to ADVICE I have based on my own learning - establish a small spread position that is hyper aggressive and designed to go ITM and need to be managed. With shares around 1170 that might be an 1150 put (start at least a bit OTM so you see the share price moving into your position and gain that experience also). One might do a range of different spread sizes - pair that 1150 up with an 1130, an 1100, a 1050, a 950, whatever width spreads that sound good to you. One of each of them maybe. Or some small very total position size that is big enough to keep your attention, and small enough that if they all turn into max losses it won't matter.
You may find that you need to run these aggressive spreads for a few weeks or more to have them go ITM. That'll be fun (high % gains), and should not turn into an effort to make more by making the positions bigger - the purpose is education and experience in a controlled sandbox type of circumstance, not the rate of return.
I did something like this a year or so back where I took an ATM cc and kept running it ATM until it assigned (took a few tries). I was consciously and intentionally running the wheel, including going through assignment each way. The Wheel strategy has always been one of my backups / management choices, and I learned that I was fine with shares to cash (put assignment), but did not like the cash to shares assignment (call assignment). What I didn't like was being out of shares and into cash, as I was constantly worried about the shares taking off and me not being ready. The emotional side of that particular strategy didn't work for me, which made it much less likely that I'll ever do that again
I couldn't find the original post. The thing about what we're doing and to keep in mind - the positions we take are defined gain and open ended loss. Or with the spreads very high but now defined losses. As this trade illustrates we can dial our risk between likelihood of loss and impact of loss.
In this case the likelihood of a max loss is high (shares under 1265). If we clear that bar then the likelihood of a max gain is also high ($5 wide spread - don't need to exceed the max loss by much). So you're highly likely to lose the .35 credit and thus low impact. That also means low impact on the gain side (.35) so a really big position size won't melt away very fast, but it'll be melting (frequent small losses).
As the larger picture is collecting value through time decay (the extrinsic value goes to 0 as we approach expiration), this position is selling very little time value and thus has little to gain.
BrownOuttaSpec
Active Member
Maybe this isn't the right topic for this thread, but does anyone know of a Options trading simulator?
Something like SimCity game where you can build a portfolio and then make changes and have time speed up or slow down or pause? Maybe something like it puts you in different scenarios/time periods randomly so it uses real stock market data and you can pick to know whether you know when you are or not (Black Monday 1929, 1987, 2008, TSLA boom of 2020, Evergrande, etc). Then you can practice managing your IC/BPS/BCS/Butterfly and you rolls/flips/buy/sell strategies?
I know there are "paper trading" portfolios where you can trade against the real market, but I wanted something where you can speed up/slow down the time aspect to be able to learn/practice quicker. Please just ignore this post if you guys think it is off topic.
Something like SimCity game where you can build a portfolio and then make changes and have time speed up or slow down or pause? Maybe something like it puts you in different scenarios/time periods randomly so it uses real stock market data and you can pick to know whether you know when you are or not (Black Monday 1929, 1987, 2008, TSLA boom of 2020, Evergrande, etc). Then you can practice managing your IC/BPS/BCS/Butterfly and you rolls/flips/buy/sell strategies?
I know there are "paper trading" portfolios where you can trade against the real market, but I wanted something where you can speed up/slow down the time aspect to be able to learn/practice quicker. Please just ignore this post if you guys think it is off topic.
I think it really comes down to how often something like closing at 100% premium loss happens "errantly". If you are netting 2% per week and take an occasional 2% loss, you can do that 10 times before you have reached the equivalent of the 20%. So if you have two 20% losses per year, you could have twenty 2% losses per year. Furthermore, a new position within the same week at potentially a better price can recover the 2% or a significant portion of it.
I wish I had some good backtested data to support my hypothesis, but the backtesters out there are not generally as flexible as I would like.
Tools for doing this stuff better is absolutely on-topic. There is back testing software that is easier and harder to use. It's not quite the same thing as you're asking about but the idea is you can develop your trading system and then let it run through time using the actual data (actual end of day data for the one I found and thought I'd use a lot, and then didn't).
But it isn't a trade on Monday and flip the days forward until you decide its time to trade again; make your trade, etc.. I don't know of anything like this, but it sure sounds interesting.
it also carries a risk of early assignment, since hardly any theta and deep itm.
And your short strike might get assigned, and you hopefully will have enough time to exercise the long or sell those shares.. but it's not for certain.
That will not happen automatically.
Sold a -1150/+1105 BPS for 11/5. Now can I finally get myself into trouble! 
TheTalkingMule
Distributed Energy Enthusiast
Those of you trading weeklies on Fidelity just got your commissions cut in half. Saw this when I set my $.10 sell order for a CC.
Thinkorswim has an "OnDemand" feature which lets you jump to any point in the past and use real option pricing and lets you pause or speed up time. I have used it to "backtest" scenarios, like selling an ATM put or spread on Februrary 8 and trying different ways of recovering from that. That has allowed me to become more comfortable with what rolling choices are available, but it lacks the pit of your stomach feeling @adiggs stresses is so important, and I agree. It's good for learning mechanics but not stress.
#4
reasoning inside head:
- 2+ yrs of anxiety is definitely absolutely not worth it for me
- i don't care for the loss; my YTD capital gain is already too much anyway
- if i BTC now, i can earn more in 2+ years (through compounding) than the loss
- 2024 sp is probably more than 3000
- take the loss and move on; 5 yrs from now, i won't even remember this loss
Days like today (hovering around the previous close) are a blessing when you already have short positions. Both puts and calls lose value at an enormous rate. Premiums for 11/12 are down 30% in just one day.
Edit: jinxed it ofcourse, with a move above $1200 again
Edit: jinxed it ofcourse, with a move above $1200 again
wait, whatSold a -1150/+1105 BPS for 11/5. Now can I finally get myself into trouble!
2% OTM?
Yeah, this is my intentional "get me into trouble" -position. It's only one contract. I've been trying to force myself to manage an aggressive bps.
I sold 10x -1200/+1000 BPSs expiring 11/5 earlier today at a ~$40 credit. Up almost 50% already. Got tired of fighting the tape. I'm prepared to have to roll if needed.
BrownOuttaSpec
Active Member
well its a little safer (for now) after that $20 pop
(assuming you didnt sell it for some quick money already)
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