Random Option plays on Market Update stock plays

[xkosmox]

What do you consider an "up day"? (And conversely, a down day)

In terms of both % and time-frame

Do we take premarket into consideration?
First half of the trading day, or specific number of hours?

Any specific % ranges?

[Yodean]

What do you consider an "up day"? (And conversely, a down day)

In terms of both % and time-frame

Do we take premarket into consideration?
First half of the trading day, or specific number of hours?

Any specific % ranges?

Best to SCC when both the general equity markets and the stock in question are green that particular day - the more green, the better the premiums. If the stock is up but the markets are down, you can still SCC, but not as optimal. If the markets are up but the stock you want to SCC is in the red, best to wait another day.

Apply everything in reverse to SCPing.

You can get even more nuanced if you want - e.g. wait for the stock to be insanely overbought on all timelines, in addition to the above, before SCCing it. And for SCPing, wait for the stock to be oversold on all timelines, and red everywhere that particular day in addition to the stock plummeting, before pulling the trigger for max premiums.

Of course, if you always wait for perfect conditions, you're losing in terms of time premium (opportunity cost), for either spins of the Wheel (SCC, SCP).

The man who deliberates fully before taking a single step will spend his entire life on one leg, and stay a virgin ...

Sometimes you can make a bit of money on both sides of the Wheel, on the same day. Has happened to me quite often, of late ...

For example, I have significant positions in assets like Skynet and TLT/TMF. So let's say Skynet opens green - I'll generally SCC some of my shares - but towards the end of the day, flips to red - if I'm around and catch the move, I'll SCP the li'l bastard. Likewise for TMF, etc.

Volatile, range-bound markets are indeed quite good for spinning the Wheel ...

[AstuteShift]

Personally I just use the SPX for options when SOL states targets, it’s super liquid and highly leveraged, which is what you need in options

Sometimes SOLs picks don’t have any liquidity so they’re terrible for options imho. Best to stick to stocks for those

If you really want to get good quickly, is sticking to one stock or index and really study the moves of the market or feel. Then you can customize your indicators for that specific sector. Imho, it’s better to focus on one thing than spreading yourself thin.

I mostly just have 3-4 assets I focus on, the rest I just read and wait for the opportunity. The market always has the next train if you miss it

[jlhooter]

Personally I just use the SPX for options when SOL states targets, it’s super liquid and highly leveraged, which is what you need in options

Sometimes SOLs picks don’t have any liquidity so they’re terrible for options imho. Best to stick to stocks for those

If you really want to get good quickly, is sticking to one stock or index and really study the moves of the market or feel. Then you can customize your indicators for that specific sector. Imho, it’s better to focus on one thing than spreading yourself thin.

I mostly just have 3-4 assets I focus on, the rest I just read and wait for the opportunity. The market always has the next train if you miss it

Astute excellent comments and extremely helpful. I love this KISS mentality and I will dwell on them for a bit.

[Yodean]

If you really want to get good quickly, is sticking to one stock or index and really study the moves of the market or feel. Then you can customize your indicators for that specific sector. Imho, it’s better to focus on one thing than spreading yourself thin.

*****

Fear the man who practices one kick 10,000x, than the man who practices 10,000 kicks once.

[jlhooter]

If you really want to get good quickly, is sticking to one stock or index and really study the moves of the market or feel. Then you can customize your indicators for that specific sector. Imho, it’s better to focus on one thing than spreading yourself thin.

*****

Fear the man who practices one kick 10,000x, than the man who practices 10,000 kicks once.

Any advice on fearing a woman?

[Centeron631]

Re TLT

in my early days here i made a terrible boner. I bought a huge hunk of TLT 264 shares @ 149.7 thinking that it was a good place to store extra cash.

Now im thinking with the Aug 2 update being optimistic in regard to bonds that i should buy a call as i do not have a huge amt of cash in that particular account right now at only 6k but maybe spend half or so . That update says buy hi at basically 117 but trading now close to 119.

Any suggestions on how to play this ( or if i should play this at all (my experience in naked calls is pretty fair compared to other options which is lower) would be much appreciated as to strike and how long out and if the price of underlying is ok even at 119 ish as could get even higher rather than lower if the turn around in bonds generally has commenced?

[Yodean]

Any advice on fearing a woman?

If she's got a detectable bulge in her pants or her hands in your pockets, them red flags, I would think.

Otherwise ... game on!

https://youtu.be/oGpFcHTxjZs

[xkosmox]

Appreciate the explanations.

Considering SCPing and SCCing TQQQ first as a (leveraged) high volatility index rather than for a specific stock

[Triplethought]

Appreciate the explanations.

Considering SCPing and SCCing TQQQ first as a (leveraged) high volatility index rather than for a specific stock

THAT sounds seriously scary man. Big. Brass. Balls

[xkosmox]

Only after im sure i've gotten the various option concepts right.

I've also noticed that there seem to be two definitions of "selling secured/closed puts" online.

1) TI's version, simply ensuring enough cash in the account (not margin) to buy the shares for any sold put option to be exercised by the buyer

2) version 1+ shorting 100 shares
Which seems to be super high risk.

Definitely going with option 1

[AstuteShift]

Never short stocks, it’s beyond risky

Instead buying puts is better and less risky.

Selling covered calls and puts on stocks you like is a very conservative and safe strategy that works

[symbios]

Only after im sure i've gotten the various option concepts right.

I've also noticed that there seem to be two definitions of "selling secured/closed puts" online.

1) TI's version, simply ensuring enough cash in the account (not margin) to buy the shares for any sold put option to be exercised by the buyer

2) version 1+ shorting 100 shares
Which seems to be super high risk.

Definitely going with option 1

Option 2 is typically known as “covered put”. Option 1 can be known as “naked put” but if you set cash aside, then it’s “cash secured put”. Astuteshift is right, if your view is the stock will go lower, buying a put is better than shorting the stock which carrries unlimited upside risks.

[SOL]

Only after im sure i've gotten the various option concepts right.

I've also noticed that there seem to be two definitions of "selling secured/closed puts" online.

1) TI's version, simply ensuring enough cash in the account (not margin) to buy the shares for any sold put option to be exercised by the buyer

2) version 1+ shorting 100 shares
Which seems to be super high risk.

Definitely going with option 1

I am not sure who advocates or suggests option 2; it's a high-risk strategy. The unbreakable rule when selling puts is to only sell puts on stocks you do not mind owning, then the strategy is even safer than trading stock, for, in essence, you are getting paid to put in a limit order. Now wheeling or spinning or whatever you want to call it allows you to turbo charge this technique. So you sell the put on Down days, and then you buy it back on up days. A volatile market is an option seller's delight in terms of risk-to-reward ratio; the reward spikes heavily in the seller's favour.

Selling covered calls can be viewed as a way of forcing a non-dividend stock to pay dividends or a dividend payer to pay even more. You sell the call on up days and buy it back on down days. A rangebound volatile market is perfect for selling puts and covered calls.

Option 3
Now you boost things by using part of the proceeds from the sale of the options to buy calls or puts, depending on your outlook, to leverage your position for free.

So, for example, if you are bullish. You can sell a covered call and use the funds to buy a cheaper call or one with a higher strike price. Hence if your shares get called away, and you don't way to roll the position, you can potentially make even more from owning the call than the shares if the stock takes off. One can also use the premium to buy puts, in essence, hedging one's position for free. The same strategy can be applied to the premium obtained from selling puts. However, 1 and 2 should be understood perfectly before moving to option 3

[nicolas]

A quick PSA for those selling puts with the primary objective of generating income:

Remember that you can be assigned at any time if the option you're short is ITM. Not just a few days before expiration. You can be assigned even if the expiration is more than 20 days away.

That means you will not always be able to roll short ITM puts closer to the expiration date.

I've already been assigned twice on ITM put options with over 20 days to expiry. And given the number of positions I've traded (38 to be exact), that's often. Definitely more than I expected.

One more reason to only sell puts on stocks we don't mind owning at the strike price!