I see, thanks for that!! but still it’s the negative value that confuses the hell out of me! The concept makes sense to me but not the way the value represents that concept
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Wiki Selling TSLA Options - Be the House
- Thread starter adiggs
- Start date
Oh wait I got it…. Basically down by 10 points is your negative number … brilliant…
Crap I need to delete some of my posts… this thread is turning into hooked on phonics for Buttershrimp …
This week was a rough week for CC sellers. I ended up buying a lot of my covered calls back both short term and long term ones. Short terms at a loss, long term at a gain or a break even.
If it is indeed true for Memorial day week and we pump next week, i'll probably end up selling the CC again at a similar or slightly higher strike to get that premium back into the account. On the bright side share price has been kind to us. Hopefully we can trade in this new band rather than the 500's.
If it is indeed true for Memorial day week and we pump next week, i'll probably end up selling the CC again at a similar or slightly higher strike to get that premium back into the account. On the bright side share price has been kind to us. Hopefully we can trade in this new band rather than the 500's.
Sorry @Chenkers false alarm, it’s bond market closing early. For my mistake let me offer the thread some choice research…. Last year similar late Thursday prememorial day run up in closing hour, then Friday before Memorial Day a massive push down in last hour … I will be holding my cc’s until an hour before close unless it gets a little too nuts tomorrow
Ah, short-handed nomenclature.
Theta is a negative number because its function decreases the value of an option contract. It just so happens that decreasing the value of a contract is what you want to happen for a sold contract so you want the theta to be as "high" as possible so it turns off as much value as possible. When people refer to "high" or "low" theta, they're referring to the magnitude of theta; when people are looking for "high" theta they're looking for a more negative number.
Theta is always a negative number (as noted above) and it has no theoretical upper bound though usually the magnitude doesn't go much above 4 or 5 or so. As noted in the post I linked describing theta, it is simply an ever-increasing percentage of a contract's extrinsic value, reaching 100% of the extrinsic value at the second of expiration.
The rest of the major greeks are positive because they add value to a contract as a function of underlying price movement (so when price/volatility goes down, it is a negative dollar value that is multiplied by the greeks).
FWIW, ∆ is the only major greek bounded between 0 and +1. Vega can be larger than 1 (usually low single digits) and gamma is way less than 1 (I'd have to noodle on what the theoretical upper bound might be...it certainly can't be more than 1)
Thanks @bxr140 . Now if I could just make sense of your example … “If next week's prospective contract has lower theta, hold. If the current contract has lower theta, roll”
but doesn’t the later strike always have a lower magnitude theta value? It doesn’t make sense to me that the current contract could ever have a lower theta than a future prospective contract with later expiration
alterac000
Member
Curious why folks are buying back their atm/itm CCs rather than rolling up and out? Are we collectively worried that next week's event is going to massively boost share price? what am I missing
I interpreted people saying they were buying them back as the first step of the rollout…. and not that people weren’t picking a new strike next week?
Seeing the parallel to last year’s Thursday and Friday antics in last hour of trading pre-memorial day makes me want to wait until the hour before close before deciding. Probably not smart if it really breaks out since my strike is at 622.50, but I doubt I’d act before 640…. @bxr140 this is the 3% rolling rule I think I got from Options Alpha…
llirk
Member
Like many of you, I have some ITM covered calls expiring today (600s and 625s). Reading through the posts, I only see thoughts of closing or rolling. This is the "wheel thread", so I'm curious why no one is accepting the exercise and immediately writing aggressive cash secured puts next week?
Does everyone just assume the share price increase due to FOMO ahead of the June 3rd event is a given and therefore owning shares is the more profitable play? If that's the logic, why not sell CSPs and buy a couple of lottery tickets instead?
Does everyone just assume the share price increase due to FOMO ahead of the June 3rd event is a given and therefore owning shares is the more profitable play? If that's the logic, why not sell CSPs and buy a couple of lottery tickets instead?
It's just called the Wheel..... was the Wheel..... now its the defacto options degenerate thread....
That said... I will be looking to roll my bought calls again if we hit $635 for more premium and more time this morning.
alterac000
Member
Thanks for all the responses
Just to clarify, my question is not about why only btc or roll, it's if you're going to btc, why not roll instead. Based on what I was reading I was getting the sense that several were simply BTC and taking a loss or breaking even. I also understand the mechanics of 2 separate trades to roll a single position if a brokerage doesn't provide a combo trade. Speaking of, if you must do it 1 trade at a time, can you not link orders conditionally, manually? Thanks to those who have been sharing their reasons and sentiments for the upcoming week.
In regards to the wheel, yes this thread started off as learning all about the wheel. I only joined TMC and more specifically this thread recently a few months ago. Some of us have some rendition of the wheel in our portfolio. And as also been stated, some of us are trading in taxable accounts, so it's not always as simple as saying just exercise and sell CSPs the following week. While this is always an option, at least myself, I prefer NOT to exercise for tax purposes. In some cases it will make sense to do this but for me, not right now. In my tax sheltered account this is a viable option. IIRC @Lycanthrope has also allowed exercise as recently as a couple weeks ago and has posted several times about his big CSP holdings. I am here to learn.
Just to clarify, my question is not about why only btc or roll, it's if you're going to btc, why not roll instead. Based on what I was reading I was getting the sense that several were simply BTC and taking a loss or breaking even. I also understand the mechanics of 2 separate trades to roll a single position if a brokerage doesn't provide a combo trade. Speaking of, if you must do it 1 trade at a time, can you not link orders conditionally, manually? Thanks to those who have been sharing their reasons and sentiments for the upcoming week.
In regards to the wheel, yes this thread started off as learning all about the wheel. I only joined TMC and more specifically this thread recently a few months ago. Some of us have some rendition of the wheel in our portfolio. And as also been stated, some of us are trading in taxable accounts, so it's not always as simple as saying just exercise and sell CSPs the following week. While this is always an option, at least myself, I prefer NOT to exercise for tax purposes. In some cases it will make sense to do this but for me, not right now. In my tax sheltered account this is a viable option. IIRC @Lycanthrope has also allowed exercise as recently as a couple weeks ago and has posted several times about his big CSP holdings. I am here to learn.
I think there will be a large push down prior to close based on the similarities last Pre Memorial Day and the fast rise last year late Thursday and the large push down sell off going into Memorial Day weekend in last hour. I think big money is executing a strategy when volumes are lower just prior to memorial day.
This has become more of a options selling thread than a wheel thread. I got out yesterday of most of my positions because I feel like the sentiment is changing, the stock is too low for me to give up my shares and IV is at IV48.3 0%. If we where in the mid 700s I would not have such a problem with doing the wheel in my IRA's. I am usually wrong on whatever I do so take everything I say with a grain of salt.
corduroy
Active Member
As far as the wheel, I have some form of a permanent short strangle going on. Sometimes it's call heavy, sometimes put heavy. I'm more conservative with my strikes that most on here (but it sure is entertaining hearing about you daredevils with your ATM strikes!)
I haven't taken assignment or let my shares get called away, mainly because I don't want to mess with my TSLA shares. I do run through the wheel cycle with other stocks I own though.
I haven't taken assignment or let my shares get called away, mainly because I don't want to mess with my TSLA shares. I do run through the wheel cycle with other stocks I own though.
llirk
Member
I should have been more clear in that my 600s are in a taxable account and my 625s are in an IRA. My plan is to buy back or roll the 600s to avoid tax hit but implement the wheel on the 625s.
Always interested in others' thoughts.
alterac000
Member
This makes a lot of sense imo
As of this moment, I plan to roll my cc602.5, 610, and 617.5, and will allow the 620 to exercise and convert to csp next week
I ended up with another -c630 position as well and am babysitting that through today
As for the IC, I am 'hoping real hard' for a temporary drop today so I can close it out and minimize the loss on the total position
As for the IC, I am 'hoping real hard' for a temporary drop today so I can close it out and minimize the loss on the total position
Looks like you're getting it!
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