Question about options, particularly about buying puts. If the SP of a security is $300 and I buy a put on that security at a strike of $100 say 24 months away, seems like I am betting that the SP will drop below my strike of $100 before 24 months goes by. Can I make money on the put if the SP decreases a good amount but never approaches the strike of $100?
-
Want to remove ads? Register an account and login to see fewer ads, and become a Supporting Member to remove almost all ads.
trading
- Thread starter Boomer19
- Start date
Yes, if the Delta gain is more than the Theta drop. Or IV goes up.
Options can shift by 10s of percent in a day.
jeewee3000
Active Member
jeewee3000
Active Member
You can. It depends on when the SP decreases a good amount. The earlier the better.
Try jotting down the prices of some puts and calls you think about and follow their price for a few days. (I'd check once every trading day around the same time and write down the Stock price corresponding to the option pricing)
This way you'll get a feel for how the bid/ask prices evolve and react to rising or falling stock prices.
After you've done this, delve a little into the theory on the greeks. You'll understand delta, gamma, implied volatility, theta and vega way better/faster after first doing some hands-on research like the above.
Note that I'm not saying you should start paper trading, just get a feel for option pricing over time and then learn the theory.
IMO you should only start buying calls/puts after understanding the implications of:
- delta
- gamma
- IV
- theta
Sounds way harder than it is.
Good luck.
I've sold 70% of my TSLA during this run-up, and bought myself enough dividend stocks to not have to work ever again. The rest of TSLA will stay in the account for 10 years, or may never be sold, passed to kids...
BTW, dividends in Canada are 4-6% from good stable (slow growth) companies, which does make me think that US market is overheated.
I will probably increase my stake again, if TSLA ever goes under $600
congrats! best wishes. i’m with you on those sentiments. unfortunately i’m not yet at the point where i can coast. younger, a lot less money, still uncertain future as far as family and 2nd half of career...
one worry is there’s been so much singing and dancing and self congratulating that it seems a bit frothy...maybe not, though. it’s just usually when that starts going on is when people get their pants pulled down. maybe we have another leg up? but some things going on mostly out of the spotlight in repo markets, earnings warnings on corona virus from some of the bigs (of course they’ll be quick to use that excuse served to them on a platter), gold reaching new highs, etc, etc. anecdotal, yes, but uncertainty not to be ignored. holding my shares, a couple DITM calls i hope to one day exercise, and cash should things go south. i’m not dancing, yet. but happy for all of you that have battled this for many years, including my close friends and mentors.
Does anyone here trade volatility as a indirect hedge for tesla shares. When volatility was low I purchased the index. Volatility can never go to zero and has a clear base on the charts for a low risk entry. Tesla falls and I make money on volatility rising. Now volatility is very high I sell the index with enough cash available if the volatility continues to rise. Volatility ALWAYS comes down in time. So assuming you have cash to back up a further rise in volatility this trade should have a 100% win rate. Any thoughts?
ev-enthusiast
Active Member
jeewee3000
Active Member
Sold 10 shares around $699 and turned 9 of them into a JUN22 1800call.
Will repeat if we go below $600.
Will repeat if we go below $600.
I'll probably be doing something very similar. Was also thinking 5 or 10 shares and converting them into options.
But damn, those Jun'22 1800s are hella expensive. They're still ~ twice what I paid for my Jun'22 990s about a month ago
I might get something more mid term, like Jun'20 or Sep'20, betting on a good quarter and/or S&P inclusion. The market could still be more spooked about corona and suppress TSLA's valuation, but I still have a ton of long term calls expiring Jun'21, Jan'22, and Jun'22, so I don't feel like I need to add more to those.
I'll probably be doing something very similar. Was also thinking 5 or 10 shares and converting them into options.
But damn, those Jun'22 1800s are hella expensive. They're still ~ twice what I paid for my Jun'22 990s about a month ago
I might get something more mid term, like Jun'20 or Sep'20, betting on a good quarter and/or S&P inclusion. The market could still be more spooked about corona and suppress TSLA's valuation, but I still have a ton of long term calls expiring Jun'21, Jan'22, and Jun'22, so I don't feel like I need to add more to those.
I think I'll do nothing for now after all. I'm leveraged enough, and there are no amazing no-brainer options deals imo, so I'd rather keep the almost risk-free shares portion of my portfolio as is, instead of cutting into that.
I'm just not bullish enough on TSLA going to $2k+ in the next 2 years. If there's enough market exuberance, it certainly can. But from a valuation perspective it''ll be on the high side imo, so I'm not willing to take on that risk.
I think we'll see EBIT of ~$8B in 2021 if execution is good, but at 40x EBIT multiple, that'd be SP of ~$1,600, and at 60x EBIT multiple, it'd be SP of ~$2,400. Higher than that requires a better execution, a rich valuation, and/or the market to attach a high value to autonomy.
jeewee3000
Active Member
Yeah my post didn't age well
.Premiums for leaps are indeed very high ATM so before getting into any others I'm waiting to see what happens next worldwide.
My intention is holding, but at the latest JUN2021 I'll be rolling those LEAPS forward at a premium in case the market/TSLA is still depressed.
Right now I'd like to see how low we will go. I really hope this isn't a 2008 repeat. (Which I can manage, but it's just not enjoyable)
There’s $650 I had been looking for. Looks good from a chart perspective. Can’t say with a straight face that Coronavirus sell off is finished yet though. Might be worth the gamble here.
If not, then $560 likely next support.
If not, then $560 likely next support.
jeewee3000
Active Member
Looks like $650ish was the right call after all. No reason why it shouldn’t at least revisit $900 to me. I’d say more likely than not it goes to $1000+ unless Coronavirus gets even worse from here.
I went heavy long on securities on Friday as I’m currently optimistic on Coronavirus progress.
Looking a tad further ahead, Q1 deliveries are a super risky play and I don’t know how the market is going to react. I have to assume negatively, though.
I went heavy long on securities on Friday as I’m currently optimistic on Coronavirus progress.
Looking a tad further ahead, Q1 deliveries are a super risky play and I don’t know how the market is going to react. I have to assume negatively, though.
ev-enthusiast
Active Member
ev-enthusiast
Active Member
ev-enthusiast
Active Member
Similar threads
- Locked
- Marketplace listing
- Marketplace listing
- Locked
- Marketplace listing
- Marketplace listing
- Locked
- Marketplace listing