scubastevo80
Member
Not I - but I'm with the consensus that META pursuing the metaverse is a huge negative and don't want to own the stock. If 20% OTM BPS or puts have huge IVs at the open, then maybe a quick trade play but otherwise no go for me.
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Wiki Selling TSLA Options - Be the House
- Thread starter adiggs
- Start date
SebastienBonny
Member
Yes, it just doesn't work like that. You can't time/plan the stock market.
We could go to 250 by friday and everybody will be thinking we'll continue up next week to 300.
Just to be back at 220 next friday.
When you're in the option market, the only think you should never do is to fear. Being 20% up one week doesn't mean next week can't go 10% lower.
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you're assuming IV, one of the major drivers of options pricing, will stay constant for long periods of time, this will most likely not be the case
SebastienBonny
Member
True, but sometimes he will be getting more than 1 dollar, sometimes he will be getting less...
You will not be able to sell a certain percentage off the market each week to get that dollar, but that doesn't really matter.
No rational person would sell puts or calls for negative time value. So put pricing will always be > (strike - currentPrice) and calls pricing > (currentPrice - strike).
The merger sets the long term (delisting) stock price to $54.20 so ultimate value is (strike - 54.20) for puts and (54.20 - strike) for calls. So no rational person would pay more than those prices for an option (other than a bet on the deal falling through).
At buyout, I think they assume infinite liquidity, so naked put writers can sell 'assigned' shares at $54.20 and naked call writers can 'buy' shares at $54.20. To the party holding the call, all they care about is the $ since they don't get shares.*
Given the long time period leading up to the merger and recent stock price, no one should be in a margin call situation at this point.
*caveat: a third party equity partner could have a large position in <$54 calls, such that they 'get' shares which are then transfered to, not bought by, X.com . It's too early for me to figure that one out...
Like a 80/70 BPS? I sold all my Meta the other day and I bought some Rivian. I was already down 50% on that position
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scubastevo80
Member
Yes - but I'd have to see what premiums are for next week on the 80/70 or 85/75 when the market opens. As of yesterday's close we're talking 4c and 9c respectively, which isn't enough for me (I'm not risking $10k for $90).Like a 80/70 BPS? I sold all my Meta the other day and I bought some Rivian. I was already down 50% on that position
For sure. I think META goes to zero eventually. I sold the $100 put at 97$ and am already out. Quick lunch money. I just couldn't not take the opportunity for another free TSLA share.
The TWTR play worked out
Right at 9:30 am, there were some high bids on puts that got wiped out within a minute. Managed to collect around $1200 worth of premium before they vanished. Spreads are crazy and I could get out now and give back $300, but might as well hold.
Right at 9:30 am, there were some high bids on puts that got wiped out within a minute. Managed to collect around $1200 worth of premium before they vanished. Spreads are crazy and I could get out now and give back $300, but might as well hold.
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B/W is my go-to strategy. My rookie mistake (now i know!) is selling ATM (cost basis 279, STO 280) on bear markets. This means i got stuck holding garbage shares during pullbacks (TWTR overhang). The "right" way would have been to STO DITM so i would be happily assigned weekly. High delta also means more profits during bounces/buybacks.
"ITM call returns generally will be lower than those on at-the-money (ATM) call strikes on the same stocks, but there is a method to this call writer’s madness. Although the return may be lower, the deeply ITM call offers the biggest premium and thus the most downside protection against a pullback in the stock. In fact, deeply ITM writes are a method that can be used to successfully write large-cap stocks in a declining market, without a protective put."
Proven Buy Write Covered Call Strategies
There are many variants of the buy-write covered call strategy. The simplest is to select the trade, buy the stock and write ATM calls; and it works. But
financhill.com
My problem with DITM calls is there's little or no extrinsic value, so you're playing the intrinsic on volatility with little Theta available. Plus you absolutely need to write them at the same or higher SP as the underlying shares. Then indeed they're better than protectives puts, because you're being paid for the same levels of insurance, but of course if the SP shoots up, more chance the calls will get exercised early as wellB/W is my go-to strategy. My rookie mistake (now i know!) is selling ATM (cost basis 279, STO 280) on bear markets. This means i got stuck holding garbage shares during pullbacks (TWTR overhang). The "right" way would have been to STO DITM so i would be happily assigned weekly. High delta also means more profits during bounces/buybacks.
"ITM call returns generally will be lower than those on at-the-money (ATM) call strikes on the same stocks, but there is a method to this call writer’s madness. Although the return may be lower, the deeply ITM call offers the biggest premium and thus the most downside protection against a pullback in the stock. In fact, deeply ITM writes are a method that can be used to successfully write large-cap stocks in a declining market, without a protective put."
Proven Buy Write Covered Call Strategies
There are many variants of the buy-write covered call strategy. The simplest is to select the trade, buy the stock and write ATM calls; and it works. But
I'm liking my current approach to sell a small number of weeklies 10x around what looks like the current pivot - 220 for this week and next
What I'm trying to work out is whether to let this week's 10x -c220's exercise and de-risk a bit into some more cash and sell some puts, or roll them two weeks out to 11/11 for +$8 per contract, which then almost hits my weekly target
Decisions, decisions...
dc_h
Active Member
In theory, if you stick to the wheel and don't chase price on your puts and calls, you should be able to maximize your profit by planning for a modest steady price increase. It is when you do spreads that you can't recover. On a big run up, you may get a small put premium, but the price should come back. The problem is when you start the wheel on a local minimum. If you sell 230 CC's now and we return to 300 and steady up from there, you're going to get less and less on your responding puts. In that line of thought, I had been selling aggressive near money/at money covered calls at 300, but am selling further OTM calls now. Premiums are small, but I don't trust starting the wheel at 200 or 220. Part of my thoughts are based on where the charts are and where I'd be happy walking away from a chunk of shares. Anything over 300 I'm ok giving up some shares and anything over 350, I'm pretty happy letting go.
When I got started doing these, I did do spreads and got hit when the Hertz announcement spiked the stock up and then the Twitter saga begin and crushed us back down. The whipsaw killed me on call and put spreads and I also chased the stock up on puts after my calls were taken. I sold calls at 900 and then puts at 1000. That is a bad business model and an expensive lesson.
anyone know what's the max pain for this week and next? My usual max-pain site is offline for some reason.
$220 for this week.
Took my January $280's that I scaled into over the past week at average cost of $5.50 each and sold for average $10 each
Went ahead an bought equal amount of March 23' $300's for $10.25 each with the proceeds now that TWTR seems to be done and macro might flinch next week at the FED meeting.
Set a stop loss for $6 on them in case it craters, to save the investment but happy with the switch from $280 --> $300 and 3 extra months.
We are ready for a run! (FED and nuclear war permitting of course)
Went ahead an bought equal amount of March 23' $300's for $10.25 each with the proceeds now that TWTR seems to be done and macro might flinch next week at the FED meeting.
Set a stop loss for $6 on them in case it craters, to save the investment but happy with the switch from $280 --> $300 and 3 extra months.
We are ready for a run! (FED and nuclear war permitting of course)
The TWTR play worked out
Right at 9:30 am, there were some high bids on puts that got wiped out within a minute. Managed to collect around $1200 worth of premium before they vanished. Spreads are crazy and I could get out now and give back $300, but might as well hold.
What was your trade? are you going to try Amazon tomorrow?
I tried AMZN right before the close. Bought NOV 8 108 puts for 5.00. Surprised they were ITM, they should have cost more.
I guess they will print tomorrow...
corduroy
Active Member
Obviously it was a bit of a gamble.
BUT, AMZN is incredibly overvalued based on the cash flow and earnings that matter so much this past year. It had already given signs the past two quarters of slowing growth. Its huge PE includes billions in earnings from RIVIAN asset recognition which must be retracted at some point, and more importantly, that is not real repeatable earnings.
AMZN is big enough to act as a bellwether for the economy, and I know that the FED hikes are starting to kick in now and will hurt Q4 especially.
Plus, how big a risk was I taking anyway? What would AMZN earnings have to be for it to actually skyrocket in this market? Of course, if I had really known, my put buy would have been an order of magnitude greater
Also some good info given recently by our own @bkp_duke on AMZN.
Sold various twitter puts $53 and under at the open. Expiration doesn't matter since the stock is being delisted as of tomorrow and the expiration will be moved forward. Just whatever had the best premium. Premium collapsed a minute or 2 after. Since MMs were only closing out, I guess some retail investors still had bids up that got wiped out pretty quick.
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