Random Option plays on Market Update stock plays

[LoriPrecisely]

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!

Nicolas, Are you in the U.S.?

[SOL]

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!

Generally, when it comes to selling puts. I opt for out of the money with more time on them as opposed to ITM. I am looking to get in at a great price, if not I want to make sure I get paid while I try. ITM moves up the risk of assignment plus on a percentage basis you tend to make less

[nicolas]

Nicolas, Are you in the U.S.?

No. I do live in Georgia, but the country!

[Yodean]

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.

I haven't been assigned too much in terms of SCP, usually at/after expiration or less than 10 days before. But I have noticed that it's happening before 10 days a bit more, as well.

Beyond considerations of strike price, Greeks, etc., I see this as a sentiment indicator pointing to the masses being nervous (WOW pattern) - the dudes on the other side of your SCP trades want to take profits earlier (by putting shares into your account).

[nicolas]

Generally, when it comes to selling puts. I opt for out of the money with more time on them as opposed to ITM. I am looking to get in at a great price, if not I want to make sure I get paid while I try. ITM moves up the risk of assignment plus on a percentage basis you tend to make less

They were OTM when I sold them

Given enough time, I am confident HIMX would go back above 9. And in theory, I could keep rolling for a credit, around two weeks before expiration, lowering my cost basis until the price recovers. This is my lesson that "in theory" doesn't always work in practice.

Not a problem for me though, now I can sell covered calls!

[nicolas]

Beyond considerations of strike price, Greeks, etc., I see this as a sentiment indicator pointing to the masses being nervous (WOW pattern) - the dudes on the other side of your SCP trades want to take profits earlier (by putting shares into your account).

My guess is that they called a bottom for HIMX yesterday. So far the chart proves them right. If HIMX does bounce strongly (which I believe it might), that was excellent timing on their part!

[jlhooter]

Beyond considerations of strike price, Greeks, etc., I see this as a sentiment indicator pointing to the masses being nervous (WOW pattern) - the dudes on the other side of your SCP trades want to take profits earlier (by putting shares into your account).

My guess is that they called a bottom for HIMX yesterday. So far the chart proves them right. If HIMX does bounce strongly (which I believe it might), that was excellent timing on their part!

My crystal ball says HIMX will drop another 5-10% before it goes back up but I only trust my ball as far as I can throw it especially since Harry sold it to me on the cheap (sorry Harry as I kid, or am I)

[SOL]

Generally, when it comes to selling puts. I opt for out of the money with more time on them as opposed to ITM. I am looking to get in at a great price, if not I want to make sure I get paid while I try. ITM moves up the risk of assignment plus on a percentage basis you tend to make less

They were OTM when I sold them

Given enough time, I am confident HIMX would go back above 9. And in theory, I could keep rolling for a credit, around two weeks before expiration, lowering my cost basis until the price recovers. This is my lesson that "in theory" doesn't always work in practice.

Not a problem for me though, now I can sell covered calls!

My bad.


In fact, if one is willing to take the risk, one ideal way of going long would be to sell most of one's shares, then sell puts on down days to get more premium and then use part of the proceeds to purchase calls if you think the stock is going to trend higher.

[Eric]

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.

Sure you can, just sell the shares back on the open market (get unassigned) and then sell a new short put.

Or as you mentioned, simply wheel it and start selling the covered calls that will get you out of the trade at a profit.

[harryg]

My crystal ball says HIMX will drop another 5-10% before it goes back up but I only trust my ball as far as I can throw it especially since Harry sold it to me on the cheap (sorry Harry as I kid, or am I)

Worked didn't it?

It did tell me that one day I would meet a tall handsome strangler, which was somewhat disconcerting...

[SOL]

My crystal ball says HIMX will drop another 5-10% before it goes back up but I only trust my ball as far as I can throw it especially since Harry sold it to me on the cheap (sorry Harry as I kid, or am I)

Worked didn't it?

It did tell me that one day I would meet a tall handsome strangler, which was somewhat disconcerting...

https://www.youtube.com/watch?v=koNwUeG-iKE

[bpcw]

My crystal ball says HIMX will drop another 5-10% before it goes back up but I only trust my ball as far as I can throw it especially since Harry sold it to me on the cheap (sorry Harry as I kid, or am I)

Worked didn't it?

It did tell me that one day I would meet a tall handsome strangler, which was somewhat disconcerting...

Very funny, can't remember sweing that one before!

[JayceP]

Good morning!

I have two questions regarding option plays following the last MU (August 28th 2022) and this seems like the proper thread to ask them.

Cannon-balling is discussed in the market update forum.

I have searched the different subsections of the forum and can't seem to find any discussion, except brief mentions, on this topic. Nothing on Investopedia and the likes, so I assume that "cannon-balling" is a term coined by Sol. Is there a place (forum or not) where I could read a bit more on that strategy?

In basic terms, you buy an out-of-money option and then sell it when it is the money. Wait for a slight pullback and use the funds to buy more out-of-the-money options in the same or similar stock. Rinse and repeat until the trend ends.

Provided the MOAB/FOAB comes to pass... Is it to say that an unofficial (as in "riskier but with more potential gains") way to play MU recommended stocks is to purchase somewhat far-dated slightly-OTM call contracts (instead of the underlying stocks themselves) and reposition on every pullback to get in-and-out these contracts, along the way, until the price of the underlying stocks eventually match MU's recommended closing price? Is it what "canon-balling" MU's picks is, in a nutshell?

Thanks and have a good Sunday!

Jayce

[SOL]

Worked didn't it?

It did tell me that one day I would meet a tall handsome strangler, which was somewhat disconcerting...

Very funny, can't remember sweing that one before!

I sometimes forget to comment on what Harry states because I am howling with laughter and then forget to comment. Harry is unique and with that memory he is a deadly foe, be forewarned better to have Harry in your corner than face him in a corner

[bpcw]

Very funny, can't remember sweing that one before!

I sometimes forget to comment on what Harry states because I am howling with laughter and then forget to comment. Harry is unique and with that memory he is a deadly foe, be forewarned better to have Harry in your corner than face him in a corner

I was referring to the video you posted!