Rolling my puts to next week for profit and credit yay!
btc 2x -p620 5/28 --- (profit of $1000)
sto 2x -p625 6/4 --- credit of $2700
btc 2x -p620 5/28 --- (profit of $1000)
sto 2x -p625 6/4 --- credit of $2700
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Wiki Selling TSLA Options - Be the House
- Thread starter adiggs
- Start date
"Education by failure" is my spirit animal
I have 3 X 612.5cc, 3 X 630cc
For 630cc, I guess I will not roll it, if it really get exercise, oh well...
For 612.5cc, maybe I should roll for a small credit to next week? It's weird, for same expiry date (5/28), the cost to roll from 612.5cc to 630cc is higher today than yesterday even for the same share price, is there any reason why?
For 630cc, I guess I will not roll it, if it really get exercise, oh well...
For 612.5cc, maybe I should roll for a small credit to next week? It's weird, for same expiry date (5/28), the cost to roll from 612.5cc to 630cc is higher today than yesterday even for the same share price, is there any reason why?
For example, when share price is 625: the cost to roll from 612.5 to 630 (same expiry date) today is around 11, but yesterday it cost less...
(yesterday I thought the price won't change much so I planned to roll today instead, but yesterday SP rise suddenly to 630 in the last 10 minutes)
IV is rising - meaning you are going to either pay more for bought contracts or make more for sold contracts. Plus the IV for your ITM calls will drop along with the Theta on day of Expiry.
Thanks, stupid me...
So I guess the best option is to roll now to next week 627.5 with $1 credit? Will it be any difference if I continue to wait assuming the share price will be around the same in the next few hours?
What a joke of a week for me. I just closed all my contracts and made a total of $136.56 on 18 CC's and 16 credit spreads
. Until the next one, I am going to go play with my kids. Good luck everyone.
corduroy
Active Member
That's a great week, you didn't lose any money!What a joke of a week for me. I just closed all my contracts and made a total of $136.56 on 18 CC's and 16 credit spreads
Not as a contract gets close to expiration.
Theta is the rate at which extrinsic value is burning off the contract value. As I attempted to describe a few months ago in that post I recently linked, theta can be visualized as an ever increasing percentage of extrinsic value rather than simply just a dollar value.
What happens close to expiration is that the extrinsic value gets low enough that even though theta is still always increasing as a %, its magnitude/dollar value peaks and then heads back to a theoretical $0 at expiration. While the timing of that peak is dependent on all manner of things, usually it happens on Thursday or Friday of expiration week.
So you can imagine this peaking theta($) curve for your current contract on Thurs/Fri and a still-climbing theta($) curve for next week's contract. At some point those curves will cross over, and the practical result is that next week's contract starts to burns off more dollars than this week's. Because you're usually looking to profit off of extrinsic value burn down when you sell an option, you'd (usually) prefer to roll to the contract with the higher theta.
It is looking like we will close <640 as predicted. But i'm not taking any chances: everything opened this week was BTC.
alterac000
Member
I don't know why I thought the market was closing early today. Oh well. Congratulations to everyone for surviving the week. Sharing for anyone who may benefit:
In total for 5/28
-c602.5, -c607.5, -c610, -c617.5, -c620, -c630, -c675
IC p525 | -p550 | -c620 | c625
CCs:
602.5cc --> 6/11 625cc for 1.00 credit
607.5cc --> 6/11 635cc for 0.30 credit
610cc --> 6/11 642.5cc for 0.15 credit
617.5cc --> 6/4 640cc for 1.00 credit - this one I may roll to 6/11 depending
620cc --> letting expire to cash, planning to sell cash secured puts next week to add onto my wheel!
630cc --> original STO 7.50 then BTC 2.00 for net credit 5.0
675cc --> expire for 0.15 credit
IC:
original credit on put arm was 1.15, call arm was 1.2. The put arm was rolled midweek to p565/-p590 for 0.26 credit.
Since the call arm was obviously losing, I ended up BTC the call vertical for 2.9 debit today. So credits (1.15+1.2+0.26) - debit 2.9 net = -0.29. I did this over 100 contracts so I lost $2900 for making a bad call, and mitigated the loss by closing before the spread approached 5 which would have cost much more.
If I could go back and do it all over again, I would have opened fewer cc strikes. It's a lot to manage. Also I would have waited longer today on the 630cc to see if I could BTC at a lower price but I kept thinking market was closing at 2pm eastern today (dummy alert!)
good luck all
In total for 5/28
-c602.5, -c607.5, -c610, -c617.5, -c620, -c630, -c675
IC p525 | -p550 | -c620 | c625
CCs:
602.5cc --> 6/11 625cc for 1.00 credit
607.5cc --> 6/11 635cc for 0.30 credit
610cc --> 6/11 642.5cc for 0.15 credit
617.5cc --> 6/4 640cc for 1.00 credit - this one I may roll to 6/11 depending
620cc --> letting expire to cash, planning to sell cash secured puts next week to add onto my wheel!
630cc --> original STO 7.50 then BTC 2.00 for net credit 5.0
675cc --> expire for 0.15 credit
IC:
original credit on put arm was 1.15, call arm was 1.2. The put arm was rolled midweek to p565/-p590 for 0.26 credit.
Since the call arm was obviously losing, I ended up BTC the call vertical for 2.9 debit today. So credits (1.15+1.2+0.26) - debit 2.9 net = -0.29. I did this over 100 contracts so I lost $2900 for making a bad call, and mitigated the loss by closing before the spread approached 5 which would have cost much more.
If I could go back and do it all over again, I would have opened fewer cc strikes. It's a lot to manage. Also I would have waited longer today on the 630cc to see if I could BTC at a lower price but I kept thinking market was closing at 2pm eastern today (dummy alert!)
good luck all
One thing I think that I've learned this week is that I think that the expiration day management for ICs isn't going to work for me. It's occupying too much time and energy, and creating too much stress. I think I'll come out a little behind overall on the ICs this week and a little ahead overall between last week and this week. I know I'm in the vicinity of even and that is plenty good for my larger initial object - gain some personal experience about how these play out, how my emotions evolve in the trade, that sort of thing.
I do think that I'll be making a phone call to Fidelity about how positions that expire within the spread are handled. I.e. a 630/650 call spread that ends at 642.50. I'd like the $12.50 loss to be realized during the weekend update and that's the end of it. That would create an overall situation that I can build a strategy around that doesn't involved last day babysitting if I don't want it, or that I can just let go to expiration knowing what my max loss / gain will be, and I can learn over the weekend how it actually played out.
I appreciate the info from @bxr140 and I don't actually expect a different answer. From Fidelity's point of view this is going to be the difference from collecting hundreds of commissions or not; maybe that will matter to them
The big decision of the day went my direction - I closed a 620/630 call spread for about $6.60 that would be nearly $10 right now (max loss). Yay me - I saved 30% over what it would have been.
I also got an early close on some 635/655 call spreads that might still expire worthless but are almost certainly much worse off right now with the shares around 633.
The problem with that isn't that I made a good choice - it's that it was a directional choice and the timing mattered deeply. I like to minimize directional choices - in the case of that 620/630 early close it could just as easily, and I sort of expected it to happen, kept going down and finished slight OTM leaving me with a max profit. If that had been a stack of 620 covered calls then I would just have rolled them - maybe yesterday - and found out next week how the position would evolve.
I do think that I'll be making a phone call to Fidelity about how positions that expire within the spread are handled. I.e. a 630/650 call spread that ends at 642.50. I'd like the $12.50 loss to be realized during the weekend update and that's the end of it. That would create an overall situation that I can build a strategy around that doesn't involved last day babysitting if I don't want it, or that I can just let go to expiration knowing what my max loss / gain will be, and I can learn over the weekend how it actually played out.
I appreciate the info from @bxr140 and I don't actually expect a different answer. From Fidelity's point of view this is going to be the difference from collecting hundreds of commissions or not; maybe that will matter to them
The big decision of the day went my direction - I closed a 620/630 call spread for about $6.60 that would be nearly $10 right now (max loss). Yay me - I saved 30% over what it would have been.
I also got an early close on some 635/655 call spreads that might still expire worthless but are almost certainly much worse off right now with the shares around 633.
The problem with that isn't that I made a good choice - it's that it was a directional choice and the timing mattered deeply. I like to minimize directional choices - in the case of that 620/630 early close it could just as easily, and I sort of expected it to happen, kept going down and finished slight OTM leaving me with a max profit. If that had been a stack of 620 covered calls then I would just have rolled them - maybe yesterday - and found out next week how the position would evolve.
If you're fixin' on taking the loss anyway, why not just set a stop loss from the off? Or at any point in the lifecycle of the position? Backing oneself into the corner of real time position maintenance (for any kind of position) is a death knell.
It bears repeating: most people selling options are making most of their profit on directional movement, and so most people are making directional choices whether they want to accept it or not. Putting some kind of directional logic under what is otherwise a gamble seems like the minimal thing to do, yeah?
And...because directional movement is a FAR bigger influencer on contract value than time decay, one definitely DEFINITELY wants to maximize directional choices.
Not wanting to do price (and volatility) analysis and also not wanting to suffer the impact of unfavorable directional movement and also not wanting do real time position maintenance is the trading equivalent of "I want to drive drunk at 100mph and not get in an accident".
You can't fight statistical inevitability.
For those content with a safer, albeit less lucrative path:
STO 40x $650s last Thursday (May 20) for $1.99, BTC on Monday morning dip for $.95 ($1.04 profit). Waited a bit for things to turn green and then STO 40x $652.50 for $2.21 on Monday and BTC on the dip Thursday morning for $1.22 ($.99 profit). Then STO a little later on the Thursday bump at 40x $655 for $1.55, BTC for $.01 ($1.54 profit).
So for the week, three different BTCs, moving back slightly at each step, and garnering $3.57 profit x 40, so a good overall week without a lot of stress. It helped timing two intraday dips followed by bumps. I figured if the MMs are going to give us the MMDs, might as well take advantage of it (Of course, in prior weeks I've BTC early and never got a chance to STO a new position. At least this week it worked).
This week turned out pretty well as planned/hoped for:
My 25x 550/575 640/655 Iron Condor got rolled up on the Put side to 560/597.5 640/655 and was closed out for around $24k total profit. Although IB seperated out the IC when I rolled the put side, so I had to close out all the legs individually.
I had 625CC, 630CC and 650CC's that I closed out for 91-98% profit. So along with a few DITM Put rolls I managed to clear just over $40k on option premiums for the week.
With the DITM Puts I split a 755P- into 10 x 595/550BPS that I was able to let comforatably expire, so around $17k of negative balance removed from the account. Late today I also converted 2x 780P- into 35x 600/630BPS for next week, so hopefully they can expire worthless as well.
Lots learned and gained this week so a big thank you to everyone that contributes to this thread.
My 25x 550/575 640/655 Iron Condor got rolled up on the Put side to 560/597.5 640/655 and was closed out for around $24k total profit. Although IB seperated out the IC when I rolled the put side, so I had to close out all the legs individually.
I had 625CC, 630CC and 650CC's that I closed out for 91-98% profit. So along with a few DITM Put rolls I managed to clear just over $40k on option premiums for the week.
With the DITM Puts I split a 755P- into 10 x 595/550BPS that I was able to let comforatably expire, so around $17k of negative balance removed from the account. Late today I also converted 2x 780P- into 35x 600/630BPS for next week, so hopefully they can expire worthless as well.
Lots learned and gained this week so a big thank you to everyone that contributes to this thread.
Wow, I owe this week's success to a lot of folks.
@Papafox's thread from last year, how similar thursday pre-memorial day late hour price movements were to last night and a very similar dynamic this friday. this gave me great background research on price movements in closing hours leading into 3 day weekend. I probably didn't use his advice as intended.
I owe @Lycanthrope for teaching me a few weeks back to not act early as long as you are in breakeven range of your strike, also open interest and strike selection. I probably didn't use his advice as intended.
I owe @bxr140 for making me think about how much rolling is not ideal and to be disciplined with evaluating trading plan. I set up times 1 hour to close, 30 min, 15 and 5 to confirm at each point if it was going the way I wanted it to with an alert set for $640 as my "must rollout" threshold. I was using the 3% Options Alpha rollout threshold (no doubt that's not intended for last our of expiration day). I probably didn't use his advice as intended.
I owe @adiggs for helping me understand concepts re: rolling dynamics and exactly how it can suck if it goes too deep. I probably didn't use his advice as intended.
Either way, I'm happy. $5,500 profit for the week and no lost shares! Yay America!
I closed these 3 in final 5 minutes:
BTC 12x cc622.50 5/28
BTC 5x cc625 5/28
BTC 2x -p625 6/4
I closed
2x -p 590 two days ago
2x -p 620 closed this morning during the rise
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