Is anybody else writing both puts and calls at the same time? If so, how is that working for you?
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Not quite. This morning I was holding covered calls, but I bought them back and sold the covering stock, then sold OTM puts that, if exercised, would buy back the stock that I just sold at a small profit. (June 26 $1000 strike, $127.3 premium.) At this instant they're down a little, but time is on my side.Is anybody else writing both puts and calls at the same time? If so, how is that working for you?
Not quite. This morning I was holding covered calls, but I bought them back and sold the covering stock, then sold OTM puts that, if exercised, would buy back the stock that I just sold at a small profit. (June 26 $1000 strike, $127.3 premium.) At this instant they're down a little, but time is on my side.
Not quite. This morning I was holding covered calls, but I bought them back and sold the covering stock, then sold OTM puts that, if exercised, would buy back the stock that I just sold at a small profit. (June 26 $1000 strike, $127.3 premium.) At this instant they're down a little, but time is on my side.
I'm worried about my 910 calls being assigned as well
Ah, come on that's chicken-*sugar* hang tough like the big boys next time!
TBH, this is perfect trading, the SP is gravitating back to $885 at every opportunity. I could also have bailed-out of too week's $875 with 60% profits, but no, screw-it, live life on the edge a bit! And I'd appreciate 100 shares to play with next week anyway.
The $895 calls went to 50% profit too, but nah, let it ride...
But if I get into closing range on the calls (say 50-70% profit), especially if there's very little time elapsed, then I'll go looking for something new I'd rather have and if I find it, then I'll close (lock in the call side gains) and open that new position.
Hah, closed in the money. Well there is still a ways till Friday.
And hey - I spent part of the day thinking I might CLOSE the Put position I opened this morning. It's already ahead >40%, so maybe I close it tomorrow!?! The challenge though, is what position would I be getting into? So my guess is that even if we keep going up tomorrow, I'll ride today's put at least until Wednesday.
In a cash secured put with no margin, you need $87,500 for the first put, and $89,500 for the second put; or a total of $176,000, and not a dime less (that's 1/10th of a dollar for those that don't interact with the world in dollars ).
That's correct, I don't use margin. Now, as the SP increases, that 176k will suddenly become 200k and so on. I tend to close the put once I am almost 85-90% and open a new one, as there is no point in waiting for that last 10-15%. What do you guys generally do?
That's what I'm doing (cash secured puts) as well. And with the increasing share price, I recently needed to shrink the number of puts I'm writing by 1. Ah well - I've been finding that the total cash / income I'm earning has been going up with the share price, so the number of puts isn't something I think much about - it is what it is
I run pretty conservatively - I have been opening puts in the .15-.20 delta range (which corresponds roughly to the market pricing in a 15-20% change of the option finishing ITM). I use the delta specifically to approximate the ProbITM, as my strategy is to collect premium and rarely get assigned (never so far, but I've only been at this for 3 months).
The pattern I've been seeing is that the .15 delta puts (or calls) get to about a 60% profit (rather the 80/90% you mentioned) at about the same time that delta has shrunk to .10 or .09. That has recently been my trigger to close the existing position for the 50-70% profit (it seems like it coasts to 70% before I can actually close - bummer!), and then immediately open a new .15 delta position. When it's working smoothly, I am rolling out 1 week - frequently at the same strike.
But the new position varies - this week my puts cratered so fast (yesterday plus today) that I closed them in 2 days. Those were 6/19 puts and because the week is so young, I've rolled in (shorter expiration) and up (higher strike) for this week. There isn't much money, but I am finding that I like the 3-8 days to expiration options the best (aggressive time decay, and frequently changing strikes enables me to adapt to the changing share price more quickly).
I've also been, off and on, doing 1 put at the .30 delta level. I call that my option where I'm daring the market to assign me. There are much better premiums available at that delta. @Lycanthrope is working at even higher deltas (I think around .40, though I think he's also not particular looking at delta). I like to work off delta as it gives me a consistent comparison from option to option, week to week, to compare how daring / risky I'm being with the options over time. I used to do .05 - .07 options; that drifted up to .10-.12, then .15. Now I'm doing .15 - .20 with occasional single options at .30 (light my hair on fire radical for me).
If you're only trading 1 underlying (TSLA; as I am as well), then I think that 70-100% profit level is a reasonable target to aim for. Or at least, 50%+ WITH a replacement position already lined up. The way I think about this - if I don't have a replacement position I'd like to take immediately (or I want out and to wait a few days+ while market conditions change), then I let the existing option keep aging out. If I don't have something to replace it with, then why not let that last $ or 2 age out?
I've mostly been finding that I find that new position when the current position hits 70-90%.
If you read other option strategies where people are trading large numbers of positions and underlying shares, you'll find them targeting 50% profits pretty consistently. They don't try to go higher - take the 50% and get a new position open ASAP. I think that's a good general plan, but with 1 underlying it doesn't work as well.
Then again - my overall target is that this is a really generous dividend play. That's my strategy, and so far it's running at 1-2% / month. Which is an outrageously good dividend, but it's also not life changing money (at least not after 3 months - if I can keep it up for 2 or 3 years, then it's retirement money and plan all on it's own).
Welcome to the thread, and I hope we hear more from you. I'm particularly interested in what you're thinking and why you're making a particular trade. That's the stuff that helps me learn and do my own trading better.