Random Option plays on Market Update stock plays

[harryg]

Rough guideline for ITM leaps is



Nah




Just buy the shares





© 1997 harryg Simplified Guide to the Markets








Personal opinion only, of course

[Yodean]

Rough guideline for ITM leaps is



Nah




Just buy the shares





© 1997 harryg Simplified Guide to the Markets

Fair enough. Rationale? I like to have multiple "options" ... lol.

[Yodean]

OK thanks. Put in limit order CALL CYBEROPTICS CORP $50 EXP 11/18/22 at $1.90 per your guidelines. So if it executes I spent $190 of my $300 premium on the put. I *kinda* get the play. If 11/18 the stock were from $35.01 to $49.99 I would pocket the $300 on the put and lose $190 on the call. If 11/18 the stock were less than $35 (say it was $33) I would be forced to buy 100 shares for $3500 so I'd be paying (3500-300+190)=$3390 for the stock. If on or before 11/18 the stock were above $50 I'd keep the $300 AND make money by (typically) selling the call before it expires.

You're learning fast ... I suspect these option strategies will end up being more profitable for you than trying to rent out your commercial real estate.


https://twitter.com/i/status/1528511094897135619

[Yodean]

Just realised that this is not strictly buys and sells, my excuse is I was only responding. Look forward to meeting you in the doghouse.

Lol, if I am not destroying threads or annoying someone, somewhere in the world, I haven't been true to myself. Can't have that ...

https://twitter.com/i/status/1528375672896356352

[SOL]

Based on this idea I just sold 1 PUT CYBEROPTICS CORP $35 EXP 11/18/22 @$3. I was surprised it executed immediately so I probably paid too much. Received only $300. So next phase should be to purchase calls? What date and strike would you be looking at?

Don't be in such a rush to give away puts for so cheap. You sold it way too cheap. The current bid is 3.10, and the ask is 4.40. At the very minimum, you divide the spread in half and add it to the bid; in this case, it would be 3.10 plus 65, which means you should have asked for 3.75 on the low end. If filled, 375 would be added to your account. My limit order is still waiting to get filled as I am asking for 3.90. If filled, I will only deploy part of this into calls as I don't want to give up all my premium on short term calls. So iI would aim for Nov 45 or 50, but I would not pay more than 3.60 and 1.90, respectively. Be greedy when you buy or sell options. Another way to bank slow but sure gains would be to buy back the puts when they show gains. In this volatile environment, you can keep jumping in and out. On up days sell covered calls. On down says sell puts. However, never overcommit funds to a given position.

OK thanks. Put in limit order CALL CYBEROPTICS CORP $50 EXP 11/18/22 at $1.90 per your guidelines. So if it executes I spent $190 of my $300 premium on the put. I *kinda* get the play. If 11/18 the stock were from $35.01 to $49.99 I would pocket the $300 on the put and lose $190 on the call. If 11/18 the stock were less than $35 (say it was $33) I would be forced to buy 100 shares for $3500 so I'd be paying (3500-300+190)=$3390 for the stock. If on or before 11/18 the stock were above $50 I'd keep the $300 AND make money by (typically) selling the call before it expires.

Pretty close. If you are filled on the call yes, 190 of the premium would be used to pay for the call leaving you with 110. If the stock starts to trend upwards, say if it hits 45, your call will rise in value, probably close to a double depending on how fast it hits that target. So you could sell your call for 3.80 and then close your put position out. At 45, you could probably buy the put back for under 1.00. What I am trying to say is that you have no obligation to wait until expiration. You could also weave and bob. When the call rises in value sell it; when the put drops in value, buy it back and then rinse and repeat

My goal here is to teach simple but advanced options strategies to several subscribers with the hope that they start to contribute and help other newbies.

[Yodean]

My goal here is to teach simple but advanced options strategies to several subscribers with the hope that they start to contribute and help other newbies.

There's been more than enough posts by various subs, etc., videos, and so forth, for those who wish to learn these option strategies, I would think, to get started. You can't really spoon-feed this stuff, imo - dangerous wrt to option trading, in particular.

You can show the way to a few doors, but ultimately the OptionsNoob still has to walk through those doors of her own volition, and Dance With Spears (large lots), or at least Play With Toothpicks (tiny lots).

Otherwise, it's arguably just another mild version of Plato's Allegory of the Cave.

[Yodean]

You could also weave and bob. When the call rises in value sell it; when the put drops in value, buy it back and then rinse and repeat

@BossJedi: been meaning to ask ---> when do you like to take profits when you SCC and SCP, i.e. close or buy back those options? 50% to 70%+?

I know it depends on many different factors, including time to expiry, position size, what you think the stock will do, etc., but some general guidelines may be helpful.

[SOL]

You could also weave and bob. When the call rises in value sell it; when the put drops in value, buy it back and then rinse and repeat

@BossJedi: been meaning to ask ---> when do you like to take profits when you SCC and SCP, i.e. close or buy back those options? 50% to 70%+?

I know it depends on many different factors, including time to expiry, position size, what you think the stock will do, etc., but some general guidelines may be helpful.

I am not greedy depending on my mood i and those behind TI can profits after the position is showing gains north of 30%. Then we wait for the pullback if its selling covered calls to take profits or a spike up if we sold cash secured puts, after that its rinse and repeat. You develop a feel once you start playing with them. It can yield large gains over a 12 to 24 month period if you are not driven by greed. I look at the stock market as ATM, but you need to be a disciplined trader. Such things cannot be taught, however, they can be learned (not good English) but it's the best I can do, some things are hard to express in words

[Triplethought]

Bought CALL WAL-MART STORES INC $110 EXP 01/19/24 for $24

[Yodean]

I am not greedy depending on my mood i and those behind TI can profits after the position is showing gains north of 30%. Then we wait for the pullback if its selling covered calls to take profits or a spike up if we sold cash secured puts, after that its rinse and repeat. You develop a feel once you start playing with them. It can yield large gains over a 12 to 24 month period if you are not driven by greed. I look at the stock market as ATM but you need to be a disciplined trader. Such things cannot be taught, however they be learned (not good English) but its the best i can do, somethings are hard to express in words

Gracias. Learnt.

Yeh, as with most things, experience generally trumps theory, although a bit of theory can be helpful in the beginning.

Some of these option strategies feels almost like printing your own fiat currency - on a much lesser scale, of course. No wonder mainstream Wall Street doesn't seem to promote them much.

https://youtu.be/HraaYH-sJBI

[Centeron631]

For learning purposes only: Can someone explain why Triple's short term cyberoptics call with only 6mo's to run bought far out of the money and yet his wmt call with 18 mo's to run so far in the money? something im not getting. thks

[Eric]

For learning purposes only: Can someone explain why Triple's short term cyberoptics call with only 6mo's to run bought far out of the money and yet his wmt call with 18 mo's to run so far in the money? something im not getting. thks

Over simplified for learning purposes. This kind of follows an 80/20 rule... Should get you at least an 80% understanding of the situation with only 20% of the words.

CYBE was selling a put. TT sold someone an issuance policy on 100 shares... Basically TT told someone "I guarantee your shares won't be worth less than $35 on November 18th" and the insurance policy premium was $300 paid to TT.

WMT was buying an in the money call... Essentially he put the shares on layaway until January 2024 and paid a 20% down payment on them.

[SOL]

For learning purposes only: Can someone explain why Triple's short term cyberoptics call with only 6mo's to run bought far out of the money and yet his wmt call with 18 mo's to run so far in the money? something im not getting. thks

The best way to learn, and I am not trying to be mean, is to Google everything you don't understand. In other words, make an attempt to try to find a solution to a problem you identified. When you try, you activate different brain cells, so now you are in a more receptive mode to digest and process information. When you sit back, and the information is handed to you, you are in a passive mode, and most of the information could fly over you.

Taking over from where Eric left. TT sold a put and used part of the proceeds to buy a far out of the money call. The far out of the money call is gambling with house money. With WMT, he likes the company but would rather not dish out so much cash, so he bought deep in the money calls with a lot of time premium on them.

[LoriPrecisely]

CYBE was selling a put. TT sold someone an issuance policy on 100 shares... Basically TT told someone "I guarantee your shares won't be worth less than $35 on November 18th" and the insurance policy premium was $300 paid to TT.

"And, if the market price is $35 or less on expiry, I will buy them from you."

[jlhooter]

Bought CALL WAL-MART STORES INC $110 EXP 01/19/24 for $24

TT, I fully understand your drive for this play. You wanted to keep your play to your target lot (~$2.4k).
What is nice about these deeper in the money calls is that you spend much less money to leverage 100 shares. In your case 2400 spend to leverage ~12500 in shares (assuming $125/share at that time) or 5:1.

Please anyone correct me if I am wrong in my math:
Running the numbers your breakeven would be $24 (premium) + $110 (strike) = $134/share (or 7.2% over the $125/share at purchase); it wouldn't make sense to call those shares until > this price. Assume you want a 20% gain, you would need the stock price to be $160.80.
Another approach for gain is to sell back the call. For 20% gain, you would need to sell the call when it hits $28.80. As of this writing the avg premium is $25.83 or you already have a 7.6% gain. Of course I am ignoring the fact that short-term changes doesn't matter too much since it could change drastically in a couple of days.

From research of LEAPS, you would do a much deeper in the money call where delta is as close to 1 as possible (presently your call is at a delta of 0.68). Delta has a couple of meanings, but for LEAPS I leverage the rule of thumb that for every $1 change in the stock price, the option moves by delta (not exact, but leverageable in trying to target entry).
On May 20 I got lucky and bought .WMT240119C70 (Jan 19, 2024 Call, $70 strike) for $50.31.
Breakeven: 50.31 + 70 = 120.31 which was slightly higher than that day's price ~$119 or 1.1% over the price at that time. For 20% gain, I want the stock price to hit $144.37. If I like the stock and I can leverage the shares <3% (Breakeven/Price), then I will place a target premium of where I think the price will go. For example if I want the price to drop $2 and the present premium is $54 with a delta of 0.87 (my delta today), I would target a premium of 54 - 2 * 0.87 <= 52.26 with a GTC order.

I understand that my premium is 2x greater than your target lot, so I would look for LEAPS with lower priced stocks. The key for me is that breakeven-to-price ratio of <3%, AND if I want to sell back my call, I can do that as well. Today the average premium is $58.10 for my call or 15.5% above my $50.31 entry.

My exit plan? Well that is a good question and I need to be patient and disciplined. I would like to see 30%, but I also purposely selected WMT because it is on the MU list. I will tend to follow Sol's exit plan on this one.