Random Option plays on Market Update stock plays

[SOL]

Google is doing a 20:1 stock split July 18.

Right on time, the NDX is very close to triggering a secondary and possibly more powerful buy signal. Also, selling puts will finally become affordable

[jlhooter]

Google is doing a 20:1 stock split July 18.

Right on time, the NDX is very close to triggering a secondary and possibly more powerful buy signal. Also, selling puts will finally become affordable

I've been biting at GOOGL for some time now and can't wait till the split so I can start SCC'ing.

[Yodean]

I hear ya. Every play is different, and even though I look at the charts and read the news updates on Schwab, I still feel like every play is a guess. Sometimes the stock price moves very little, sometimes a lot, up and down. There seems no rhyme or reason. I guess that is part of the game.

I agree with you on having a profit to sell at. I know Sol has talked about that, but I haven't settled on an amount yet. I don't like to close when there is still money on the table, even if it is 80%.

I have not done a longer expiration than 2 months, but after Sol said he did, I have been watching how the prices fluctuate a lot, just like they do for nearer expirations, so I will try that soon.

My 2c:

-I generally don't find news updates particularly helpful, especially from mainstream sites. A lot of the news is somewhat faulty or irrelevant at best, and even if the news is important (e.g. some all-star CEO falls dead mysteriously post-jab, as a minor example), most of that news is already baked into the stock's price by the time you read about it.

-every play is indeed a guess - the idea is to improve one's skill at guessing, lol; one useful skill for options trading is refining your ability to read charts, both from a sentiment and technical perspective, in the time frame in which you are SCC'ing and SCP'ing; e.g. if you're mostly using expiration dates of up to two months, then the daily and weekly charts are going to be more important than the monthly charts, generally speaking, and momentum may play a much bigger role than how oversold or overbought a certain stock is;

-for me atm, using half-decent (half-assed) technical and sentiment analyses has been more helpful (profitable) in terms of my Wheeling than relying on the Greeks; I find using the Greeks somewhat time-consuming (especially if you're making a fairly large number of trades daily) and not particularly useful; this may change as I acquire more experience Wheeling;

-in terms of profit-taking, I've been experimenting with a wide range of targets, and I don't think you necessarily want to have a fixed number; for example, if a Wheel trade is for a small amount and is very close to expiry OTM, I won't bother closing (part of this is because of the high Canadian brokerage fees), and I'll generally just let it expire; on the other hand, if the trade is for a much larger amount of $$$, I generally take profits a bit earlier (i.e. at a lower profit target); it also depends on what you think a particular stock is going to do in the near future;

-for example, I've been SCP'ing INTC consistently from around $41 to $36 on down days, and I've rolled the trades above $39 forward, but kept the $36 - $37.50 ones, since I think INTC has more or less bottomed in the near term, and I don't mind owning more INTC below $38; same kind of thing with URNM, for me;

-although I generally like to Wheel in the 4 - 6 week expiration period, I'll often use longer periods, depending on the specifics of a trade; from my experience thus far, although the shorter durations are generally good to use since you are taking advantage of exponential theta decay, the shorter durations may also work against you when there's a lot of volatility for a particular stock and unexpected events occur - i.e. the price action goes suddenly against your base case ... now your Wheel trade with short expiration is trashed because there isn't much time for the stock price to recover to your expected direction, so exponential theta decay is working against you, instead of for you; in the currently volatile atmosphere, this is happening more often than usual, I think;

[LoriPrecisely]

Google is doing a 20:1 stock split July 18.

Right on time, the NDX is very close to triggering a secondary and possibly more powerful buy signal. Also, selling puts will finally become affordable

I've been biting at GOOGL for some time now and can't wait till the split so I can start SCC'ing.

I did this with Amazon when they did their stock split, but when I have done a couple covered calls, I get nervous, because I don't really want to sell them.

[LoriPrecisely]

My 2c:

-I generally don't find news updates particularly helpful, especially from mainstream sites. A lot of the news is somewhat faulty or irrelevant at best, and even if the news is important (e.g. some all-star CEO falls dead mysteriously post-jab, as a minor example), most of that news is already baked into the stock's price by the time you read about it.

-every play is indeed a guess - the idea is to improve one's skill at guessing, lol; one useful skill for options trading is refining your ability to read charts, both from a sentiment and technical perspective, in the time frame in which you are SCC'ing and SCP'ing; e.g. if you're mostly using expiration dates of up to two months, then the daily and weekly charts are going to be more important than the monthly charts, generally speaking, and momentum may play a much bigger role than how oversold or overbought a certain stock is;

-for me atm, using half-decent (half-assed) technical and sentiment analyses has been more helpful (profitable) in terms of my Wheeling than relying on the Greeks; I find using the Greeks somewhat time-consuming (especially if you're making a fairly large number of trades daily) and not particularly useful; this may change as I acquire more experience Wheeling;

-in terms of profit-taking, I've been experimenting with a wide range of targets, and I don't think you necessarily want to have a fixed number; for example, if a Wheel trade is for a small amount and is very close to expiry OTM, I won't bother closing (part of this is because of the high Canadian brokerage fees), and I'll generally just let it expire; on the other hand, if the trade is for a much larger amount of $$$, I generally take profits a bit earlier (i.e. at a lower profit target); it also depends on what you think a particular stock is going to do in the near future;

-for example, I've been SCP'ing INTC consistently from around $41 to $36 on down days, and I've rolled the trades above $39 forward, but kept the $36 - $37.50 ones, since I think INTC has more or less bottomed in the near term, and I don't mind owning more INTC below $38; same kind of thing with URNM, for me;

-although I generally like to Wheel in the 4 - 6 week expiration period, I'll often use longer periods, depending on the specifics of a trade; from my experience thus far, although the shorter durations are generally good to use since you are taking advantage of exponential theta decay, the shorter durations may also work against you when there's a lot of volatility for a particular stock and unexpected events occur - i.e. the price action goes suddenly against your base case ... now your Wheel trade with short expiration is trashed because there isn't much time for the stock price to recover to your expected direction, so exponential theta decay is working against you, instead of for you; in the currently volatile atmosphere, this is happening more often than usual, I think;

All good points, Yodean, thank you. I experienced the theta decay you speak of working against me this past week. I had several stocks assigned to me, 2 Asana Puts, and 1 Match Put, and I closed PDD at a significant loss, but I will sell more puts this week to recoup my losses. I keep track of my trades on an Excel spreadsheet, and I see that paying large premiums to close really takes a bite out of my profits. The Put premiums on PDD on Friday fluctuated by $1.00, from $3.58 in the morning to $2.39 at 3:45pm.

[SOL]

All good points, Yodean, thank you. I experienced the theta decay you speak of working against me this past week. I had several stocks assigned to me, 2 Asana Puts, and 1 Match Put, and I closed PDD at a significant loss, but I will sell more puts this week to recoup my losses. I keep track of my trades on an Excel spreadsheet, and I see that paying large premiums to close really takes a bite out of my profits. The Put premiums on PDD on Friday fluctuated by $1.00, from $3.58 in the morning to $2.39 at 3:45pm.

You are forgetting one key factor. If you sell a put and it's taking a loss, you can roll over that put by doing another credit spread. I did that with PDD-covered calls. The calls i sold were now deep in the money so either I would have to give up my shares or roll the call. So I did a credit spread. I bought back the current calls and sold further out-of-the-money calls with a lot more time premium. The calls were roughly 15 dollars in the money, yet I managed to roll the position and bank 100 in premium. Then when PDD pulled back, I repurchased the calls and walked away with a total of almost 900 in gains as the stock fell from 66 to below 54.

You can do the same with the puts. You can either do it in two transactions or as a credit spread. So in one leg (one transaction) you buy back the puts and sell puts that are further out of the money with more time premium, and net net you walk away with a gain ranging from small to large. Now wait for the stock to move up and then close the put position and walk away with even more gains.

[jlhooter]

All good points, Yodean, thank you. I experienced the theta decay you speak of working against me this past week. I had several stocks assigned to me, 2 Asana Puts, and 1 Match Put, and I closed PDD at a significant loss, but I will sell more puts this week to recoup my losses. I keep track of my trades on an Excel spreadsheet, and I see that paying large premiums to close really takes a bite out of my profits. The Put premiums on PDD on Friday fluctuated by $1.00, from $3.58 in the morning to $2.39 at 3:45pm.

You are forgetting one key factor. If you sell a put and it's taking a loss, you can roll over that put by doing another credit spread. I did that with PDD-covered calls. The calls i sold were now deep in the money so either I would have to give up my shares or roll the call. So I did a credit spread. I bought back the current calls and sold further out-of-the-money calls with a lot more time premium. The calls were roughly 15 dollars in the money, yet I managed to roll the position and bank 100 in premium. Then when PDD pulled back, I repurchased the calls and walked away with a total of almost 900 in gains as the stock fell from 66 to below 54.

You can do the same with the puts. You can either do it in two transactions or as a credit spread. So in one leg (one transaction) you buy back the puts and sell puts that are further out of the money with more time premium, and net net you walk away with a gain ranging from small to large. Now wait for the stock to move up and then close the put position and walk away with even more gains.

Sol thanks. Going to roll today which should help if goes according to plan today.

[jlhooter]

BABA update
Assuming my BTO $135, Jul 29 Call would expire useless and I can sell back to reduce hit, maybe it can be -$4.25.
I rolled my STO $121, Jul 29 Put by buying it back at -16.40 and selling a $100 Jan 20, 2023 Put for $13.75; net premium is:
$9.57 (orig Put) - 16.40 + 13.75 - 4.25 = +2.67
My cost basis went from 115.68 (121 - 9.57 + 4.25) to 97.33 (near where BABA seems to be bottoming). BABA is now 105.29.
Worth the effort; happy with present recover. Let's see where this goes.

[Yodean]

You are forgetting one key factor. If you sell a put and it's taking a loss, you can roll over that put by doing another credit spread. I did that with PDD-covered calls. The calls i sold were now deep in the money so either I would have to give up my shares or roll the call. So I did a credit spread. I bought back the current calls and sold further out-of-the-money calls with a lot more time premium. The calls were roughly 15 dollars in the money, yet I managed to roll the position and bank 100 in premium. Then when PDD pulled back, I repurchased the calls and walked away with a total of almost 900 in gains as the stock fell from 66 to below 54.

You can do the same with the puts. You can either do it in two transactions or as a credit spread. So in one leg (one transaction) you buy back the puts and sell puts that are further out of the money with more time premium, and net net you walk away with a gain ranging from small to large. Now wait for the stock to move up and then close the put position and walk away with even more gains.

This brings up a somewhat unrelated question I've been meaning to ask: do you use the Greeks in any meaningful manner when setting up your options trades?

[SOL]

You are forgetting one key factor. If you sell a put and it's taking a loss, you can roll over that put by doing another credit spread. I did that with PDD-covered calls. The calls i sold were now deep in the money so either I would have to give up my shares or roll the call. So I did a credit spread. I bought back the current calls and sold further out-of-the-money calls with a lot more time premium. The calls were roughly 15 dollars in the money, yet I managed to roll the position and bank 100 in premium. Then when PDD pulled back, I repurchased the calls and walked away with a total of almost 900 in gains as the stock fell from 66 to below 54.

You can do the same with the puts. You can either do it in two transactions or as a credit spread. So in one leg (one transaction) you buy back the puts and sell puts that are further out of the money with more time premium, and net net you walk away with a gain ranging from small to large. Now wait for the stock to move up and then close the put position and walk away with even more gains.

This brings up a somewhat unrelated question I've been meaning to ask: do you use the Greeks in any meaningful manner when setting up your options trades?

Hardly look at them. I find them to be too much of a pain. While they can work sometimes, they don't work as often as I like, and personally (others might disagree), the effort is not worth the reward. So I focus on technicals, using volatility to my advantage (sell calls on up days and puts on down days), sentiment, etc

[LoriPrecisely]

You are forgetting one key factor. If you sell a put and it's taking a loss, you can roll over that put by doing another credit spread. I did that with PDD-covered calls. The calls i sold were now deep in the money so either I would have to give up my shares or roll the call. So I did a credit spread. I bought back the current calls and sold further out-of-the-money calls with a lot more time premium. The calls were roughly 15 dollars in the money, yet I managed to roll the position and bank 100 in premium. Then when PDD pulled back, I repurchased the calls and walked away with a total of almost 900 in gains as the stock fell from 66 to below 54.

You can do the same with the puts. You can either do it in two transactions or as a credit spread. So in one leg (one transaction) you buy back the puts and sell puts that are further out of the money with more time premium, and net net you walk away with a gain ranging from small to large. Now wait for the stock to move up and then close the put position and walk away with even more gains.

I have been doing that, just as you taught me.
I did that today.
I chose to lower my strike price, rather than recoup my entire premium paid.
My original Put was for 57. strike with .82 premium.
I paid 2.30 to close Friday.
I opened a 54. Put for .96 today.
PDD went from 58. to 55. today.
So, it looks like I might get assigned this Friday
If so, I am going to Sell CC against it next week, because I noticed today that I could have received more for a July 29 - 60. strike Call than I received for the Put today.

I am still profitable, overall, because of the other premiums I have collected from PDD over the past 5 weeks.

What date did you roll your Calls out to? I have not done more than two months out.

[LoriPrecisely]

Berkshire Hathaway (Buffett) on July 14, 15, and 16, bought OXY in 5 lots totaling $83,858,848.81.
http://archive.fast-edgar.com/20220718/ ... CZZ2SZK42/

[SOL]

I have been doing that, just as you taught me.
I did that today.
I chose to lower my strike price, rather than recoup my entire premium paid.
My original Put was for 57. strike with .82 premium.
I paid 2.30 to close Friday.
I opened a 54. Put for .96 today.
PDD went from 58. to 55. today.
So, it looks like I might get assigned this Friday
If so, I am going to Sell CC against it next week, because I noticed today that I could have received more for a July 29 - 60. strike Call than I received for the Put today.

I am still profitable, overall, because of the other premiums I have collected from PDD over the past 5 weeks.

What date did you roll your Calls out to? I have not done more than two months out.

I had Aug 55 calls and I rolled them out to Jan 2023 calls, So I recouped all the money that the AUG calls were costing me and then some. When PDD dropped from 66 ranges I bought back the calls and Sold puts. I bought back the puts yesterday early during the trading

[harryg]

This brings up a somewhat unrelated question I've been meaning to ask: do you use the Greeks in any meaningful manner when setting up your options trades?

Hardly look at them. I find them to be too much of a pain. While they can work sometimes, they don't work as often as I like, and personally (others might disagree), the effort is not worth the reward. So I focus on technicals, using volatility to my advantage (sell calls on up days and puts on down days), sentiment, etc

I concur. I spent a lot of time on them, even on 'improvements' to Black Scholes. Almost a red herring in my view.

[jlhooter]

This brings up a somewhat unrelated question I've been meaning to ask: do you use the Greeks in any meaningful manner when setting up your options trades?

Hardly look at them. I find them to be too much of a pain. While they can work sometimes, they don't work as often as I like, and personally (others might disagree), the effort is not worth the reward. So I focus on technicals, using volatility to my advantage (sell calls on up days and puts on down days), sentiment, etc

I concur. I spent a lot of time on them, even on 'improvements' to Black Scholes. Almost a red herring in my view.

I look at delta only.