All things STOCKS

#11,626
#11,626
VALE has not been very good for me, but it's hard to say anything bad on a day when a stock is up 7%. I can't make myself sell it for a loss with a P/E of 3. Might die with it.
 
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#11,627
#11,627
Velo Vol said:
A few things to discuss from videos. Brad Finn says to avoid selling calls options of longer than 30-45 days out. Does that jive with experience here?
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I think you need somebody to say why they would ever do that. It's just a lot easier to talk about strategies you WOULD have, and why. You need to give us some context. If you own the stock, then that's a strategy. If you create a synthetic short position, that's a strategy. If you can recall what he was actually talking about, maybe it'll make more sense.

FWIW, I do look at selling a weekly 4 times vs. selling a monthly. How much money is that each way. That just seems obvious to me. And then once you sell one, you have a hard time not noticing the price movement. Paper trading is better, but of course it's not nearly so motivational. It seems to me that there is a whole awful huge lot of value that clings on there for life right up to Friday.

Buying is another matter. When you buy calls really far out, there's lots of chances that the option will temporarily be worth more than you paid sometime in there, due to price movement or even just volatility. If it expires ITM, great, but it may actually make you a profit on its way to expiring worthless. I do not do this much.
 
#11,629
#11,629
Firebirdparts said:
I think you need somebody to say why they would ever do that. It's just a lot easier to talk about strategies you WOULD have, and why. You need to give us some context. If you own the stock, then that's a strategy. If you create a synthetic short position, that's a strategy. If you can recall what he was actually talking about, maybe it'll make more sense.
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He didn't elaborate on this point in the video I watched (he might have elsewhere). Just said under 45 days "theta is on your side." #5 below at the timestamp.

1661275750791.png
 
#11,630
#11,630
Covered calls, then. The way the options are priced would lead you to sell shorter ones more often, I think. You have to decide whether you think it's equivalent to sell a $50 next week but a $55 4 weeks out. You have to choose what you compare to. SPY is pretty low volatility, but if we look at that, you'd see this, just arbitrarily here comparing a strike of 420, which is a little less than 2% out of the money.
August 24 0.16
August 26 1.18
August 29 1.60
August 31 2.23
Sept 2 2.90
Sept 6 3.28 (it's a Tuesday)
Sept 7 3.54
Sept 9 4.12

So you can think about whether you would try to make a dollar twice a week on this vs. make 4 dollars in 2 weeks at the same strike price. It's much less risky to try to make a dollar twice a week. An option with the same delta on September 9 would have a strike of 427 and is only worth $1.73. There's just no contest.

NOW. That said, as I mentioned before, you can't sell that $1 option very long before you lose your SPY. You'll lose it pretty fast. If you want to seldom lose it, in my experience you need to sell options worth 30 cents or something. But if you're wheeling it, there really isn't a whole lot of risk of ruin. You just have the risk that the market drops 50% (or whatever) and you own the SPY when that happens. Same risk as all the buy-and-holders.
 
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#11,631
#11,631
Velo Vol said:
Why did you pick 162.5?
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I looked at the price differences at each strike and just liked the extra $250 discount/contract if I was assigned to buy the shares PLUS the much better probability of not being assigned. I thought that NVDA could easily fall from $172.32 to $165, but falling to $162.5 seemed far less likely. So I gave up about $1 (x100) on the 162.5 contract for the additional $250 discount and the better odds of not being assigned.
 
#11,632
#11,632
What is hard RIGHT NOW is to translate mentally the price of options below $1. With stocks I have no difficulty evaluating share prices no matter where the decimal is. $250/share or $25/share or $500/$50 or whatever doesn’t phase me. There might be something psychological about evaluating contracts priced under $1, even though the math should be simple by just multiplying the number of contracts involved when strikes are single or low double digits.
 
#11,633
#11,633
Actually the difference on the NVDA 162.5 v 165 PUT might have been about $0.60 +/-.

I sold for $2.35 and the contract is around $1.75 with 3 days to go to expiration. NVDA is $172.8.
 
#11,634
#11,634
Thunder Good-Oil said:
I looked at the price differences at each strike and just liked the extra $250 discount/contract if I was assigned to buy the shares PLUS the much better probability of not being assigned. I thought that NVDA could easily fall from $172.32 to $165, but falling to $162.5 seemed far less likely. So I gave up about $1 (x100) on the 162.5 contract for the additional $250 discount and the better odds of not being assigned.
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So (at least at this stage) you're doing it more by feel than any predetermined rules?
 
#11,636
#11,636
Velo Vol said:
So (at least at this stage) you're doing it more by feel than any predetermined rules?
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Pretty much. And I was just thinking earlier today about all of the stuff that I don’t know well (the Greek letters, Black Scholes, technical analysis, etc) and figured that if I was following the models exactly as I’m supposed to that I might be at a disadvantage against the algorithmic trading. But I won’t ignore that stuff forever. I’m mostly considering the stock price versus the strike and the time left on the contracts. Most importantly I consider if it will bother me if I get assigned by either type of contract. The IRA that I’m using is still almost 40% cash and I’m not necessarily wanting to hold my long stocks forever. And since it is an IRA I’m not concerned with generating taxable gains if my covered calls are assigned.

So far I’m 4 for 4 in closed positions with 3 contracts expiring this Friday. But it’s because there haven’t been situations with 5-10 consecutive days that the markets moved against me yet and not that I’ve stumbled upon a perfect system. I’m also kind of figuring that with the not so thinly traded (relatively) weekly options on the larger cap stocks that I’m using that the prices determined at any moment are pretty efficient. I’m not going to spot the mis-priced contracts to exploit.

Open:
(NVDA: $171.81)(ISRG: $216.81)

Sold NVDA 220826 C 202.5 ($2.89)(8/15)(
($0.12-$0.14)

Sold NVDA 220826 P 162.5 ($2.35)(8/22)
($2.00/$2.04)

Sold ISRG 220826 P 210 ($1.35)(8/22)
($0.95/$1.15)

I tried to close the NVDA C 202.5 today and just missed my limit (by $0.02). I’ll try again tomorrow and might do a market order if necessary to get it closed out before the earnings report after the 8/24 close. Even if it is an outstanding ER, I don’t think NVDA stock is going to go up $30/share. But with only $12/$14 additional profit/contract available it’s best to go ahead and buy that one back.

With the PUTs, I kind of want to buy the shares anyway. So I’ll most likely ride them out. I could lose my options profits, but I’d own the shares at a much better price. And I’d probably end up writing covered calls on the additional shares after the share price declines settle down.
 
#11,639
#11,639
According to this video one should generally sell options because the implied volatility in the prices is more often than not greater than the actual volatility turns out to be.

 
#11,641
#11,641
The after hours traders are trying to get me assigned with the NVDA 220826 P 162.5 that I’m short.

$172.22 NVDA at the close
$164.40 NVDA bid (39)
$164.45 NVDA ask (11)

I’m good. I’ll buy NVDA at $162.50 and won’t lose a minute of sleep. Then I will do the wheel thing shorting the covered calls pretty soon thereafter.

Kind of funny. Ameritrade just sent me an e-mail to advise me that they’ve lowered my options approval tier (with no explanation). I guess Fidelity hasn’t tipped them off that I just ramped up my options trading activity. No sweat. I’m not about to mess with the spreads, straddles, strangles, condors, butterflies, or naked anything in the near term anyway.
 
#11,642
#11,642
Thunder Good-Oil said:
The after hours traders are trying to get me assigned with the NVDA 220826 P 162.5 that I’m short.

$172.22 NVDA at the close
$164.40 NVDA bid (39)
$164.45 NVDA ask (11)

I’m good. I’ll buy NVDA at $162.50 and won’t lose a minute of sleep. Then I will do the wheel thing shorting the covered calls pretty soon thereafter.

Kind of funny. Ameritrade just sent me an e-mail to advise me that they’ve lowered my options approval tier (with no explanation). I guess Fidelity hasn’t tipped them off that I just ramped up my options trading activity. No sweat. I’m not about to mess with the spreads, straddles, strangles, condors, butterflies, or naked anything in the near term anyway.
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I'm at almost same $ for NVDA, but with the expectation of holding it long term. OTOH, things change,
 
#11,646
#11,646
Go aeiou said:
PLTN, going to near $0.00?

Overpriced crummy quality treadmill and bike.
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Weird. Yesterday they had the big news about starting to sell through Amazon. This morning it’s off by 15%.

I’ve never understood the appeal of PLTN stock. The spend a fortune advertising. Their bikes are overpriced. How many bikes can they possibly sell? What’s the barrier to entry for competition? The monthly subscription is ridiculously expensive. I guess there are a lot of sheep that bought into their stupid ads and they rode the stay at home COVID wave.
 
#11,647
#11,647
Thunder Good-Oil said:
I’ve never understood the appeal of PLTN stock. The spend a fortune advertising. Their bikes are overpriced. How many bikes can they possibly sell? What’s the barrier to entry for competition? The monthly subscription is ridiculously expensive. I guess there are a lot of sheep that bought into their stupid ads and they rode the stay at home COVID wave.
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My understanding is that it's kind of like a spin class membership (where you buy the bike) and also there's a social network dynamic that may keep people in. You get used to riding with certain people.
 
#11,648
#11,648
Velo Vol said:
My understanding is that it's kind of like a spin class membership (where you buy the bike) and also there's a social network dynamic that may keep people in. You get used to riding with certain people.
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I think understand the business model. I don’t understand the appeal. Of the stock or of the high cost. The subscription is about $50/month. Planet Fitness is $10/month and it shouldn’t be difficult for them to get on the internet either. I guess with Peleton they would display each rider’s stats, but how important is that?
 
#11,649
#11,649
NVDA is now $168.75. In the extended hours it fell to $163 ($162.50 strike). I don’t know if you can get assigned outside of the 9:30-4 regular session, but I had a $0.50 cushion regardless.
 
#11,650
#11,650
PTON stock had a near $50 billion market cap. It’s going to be about $3 billion at the open.

Carvana is another **** company that advertised their way to a ridiculous market cap.
 
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