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Rangoth

Rangoth

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Typing from ipad at airport so apologies for shit formatting….

Question for some of the options folks here, do you trade options like you would a stock with limit, ie. buying at point X and selling when you make some % of profit or do you use options as a creative way to try to buy/sell at your desired entry/exit points while taking a pemium if it doesnt close at that target end of week or month?

I ask because im not doing bad, but i keep seeing the same thing happen over and over and cant figure out if im leaving money on the table or just the luck and way of the market.

Example on the CC side. Ill buy some something at say, 9.50$ And I set my exit point at 10$. I can obviously use limits but if i sell the CC for the 10 strike, right after i buy it for example, the premium might only be .05/.10.

Here is where i struggle….im happy to sell at 10$, so sure ill miss the “to the moon” shit, but this isnt about that. Where i struggle is if i sell the CC right away i make .05(which isnt great, .5%). If i wait and the stock goes up to 9.80 i may be able to sell the same option for double, but if it stalls or moves down i can now get 0$ for my option and i lost the option period(week/month). Again im not so much worried about it eventually hitting 10$ its more about trying to better figure out if i should just take the .5% or try to hold out

I guess there is a math equation involved here, right? But it gets complicated factoring in compound interest and bigger/real numbers. The stock may take 3 weeks to hit my 10 sell target and .5% for 3 weeks can be decent, especially compared to 0 waiting for a better premium.

Sometimes i wonder if im better off doing limits but then i just think of the money i could have made while the limit took a month to be triggered :(

I guess what breaks my heart is the periods where it swings to like 9.95$ and i could have sold the option for almost triple only to watch it not close out at 10 anyway. Meanwhile i sold it a week ago for my measly .5%
 
Sanrith Descartes

Sanrith Descartes

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Rangoth said:
Typing from ipad at airport so apologies for shit formatting….

Question for some of the options folks here, do you trade options like you would a stock with limit, ie. buying at point X and selling when you make some % of profit or do you use options as a creative way to try to buy/sell at your desired entry/exit points while taking a pemium if it doesnt close at that target end of week or month?

I ask because im not doing bad, but i keep seeing the same thing happen over and over and cant figure out if im leaving money on the table or just the luck and way of the market.

Example on the CC side. Ill buy some something at say, 9.50$ And I set my exit point at 10$. I can obviously use limits but if i sell the CC for the 10 strike, right after i buy it for example, the premium might only be .05/.10.

Here is where i struggle….im happy to sell at 10$, so sure ill miss the “to the moon” shit, but this isnt about that. Where i struggle is if i sell the CC right away i make .05(which isnt great, .5%). If i wait and the stock goes up to 9.80 i may be able to sell the same option for double, but if it stalls or moves down i can now get 0$ for my option and i lost the option period(week/month). Again im not so much worried about it eventually hitting 10$ its more about trying to better figure out if i should just take the .5% or try to hold out

I guess there is a math equation involved here, right? But it gets complicated factoring in compound interest and bigger/real numbers. The stock may take 3 weeks to hit my 10 sell target and .5% for 3 weeks can be decent, especially compared to 0 waiting for a better premium.

Sometimes i wonder if im better off doing limits but then i just think of the money i could have made while the limit took a month to be triggered :(

I guess what breaks my heart is the periods where it swings to like 9.95$ and i could have sold the option for almost triple only to watch it not close out at 10 anyway. Meanwhile i sold it a week ago for my measly .5%
Click to expand...
A lot to digest.

Some of your boggle can be solved using the Greeks. The Delta if an option can tell you for every dollar in price moment if the underlying stock, how much the option will move.
Example a Delta of 0.25 means if the stock moves a dollar the option will move 25 cents.
Gamma will tell you the rate that Dekya changes.

Second, for options I use a backtest calculator to estimate the chance for assignment and choose my strike that way.

Finally the IV modifies the premium. So a low IV option pays a lot less premium than a high IV option. The low IV one has less price movement and is easier to predict.

Finally part 2: time value also plays into premium.
 
Rangoth

Rangoth

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Ahhh yea. It wasn’t so much a technical question as I understand that part. It was more of a personal experience/opinion question.

my example would be that I buy something at the 100MA because I think it will bounce. I am happy to sell at 5-10% profit because that’s makes me happy. But since l bought it at this currently low price. If I sold an immediate, let’s say month long option at my desired profit price the premium is currently somewhat shit. Let’s also say that there is a 50% chance(from fidelity backrest) to get assigned.
In my perfect world I always win. Assigned and I sold for profit + premium not assign I got premium. Only bad case for me is it blowing past 100MA to 0. I get it.
BUT this is the piece I struggle with. If I just wait halfway into the month for the option and it does go up(still 50% chance of assignment) the premium is significantly higher than it would have been if I sold it the day I bought the stock. Know what I mean?

I constantly struggle with if I should wait until it rises a bit to sell the call/put or just sell it immediately
 
Sanrith Descartes

Sanrith Descartes

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Rangoth said:
Ahhh yea. It wasn’t so much a technical question as I understand that part. It was more of a personal experience/opinion question.

my example would be that I buy something at the 100MA because I think it will bounce. I am happy to sell at 5-10% profit because that’s makes me happy. But since l bought it at this currently low price. If I sold an immediate, let’s say month long option at my desired profit price the premium is currently somewhat shit. Let’s also say that there is a 50% chance(from fidelity backrest) to get assigned.
In my perfect world I always win. Assigned and I sold for profit + premium not assign I got premium. Only bad case for me is it blowing past 100MA to 0. I get it.
BUT this is the piece I struggle with. If I just wait halfway into the month for the option and it does go up(still 50% chance of assignment) the premium is significantly higher than it would have been if I sold it the day I bought the stock. Know what I mean?

I constantly struggle with if I should wait until it rises a bit to sell the call/put or just sell it immediately
Click to expand...
There isn't a "right answer" to this part. The odds of timing a bounce or dip perfect are pretty slim.

I think of CCs as additional dividend. Especially on low beta stocks. KO is a good example for me. I got assigned on puts at $50. Made 35 cent premium. It dropped to about $48 over a few weeks. I sold weekly CCs for like 10 cents at around 50.5 and 51. It sounds like an ass premium and it is. But I got 4% divvy payout while I held and made about another buck in premiums when I got exercised at $52. So in about 8-10 weeks I made about 12%. Not flashy but I was holding a quality blue chip and made 12% in two months. I never felt I was "in danger" on a bad trade.

I sell CCs on spikes up when I think it peaks for max premium. I just did PLTR yesterday. I got 29 cents and it ended up gapping higher and topped out at 35 cents. I don't ever consider that extra gap up. I set my limit and got 29 cents which I was happy with. I ignore any premium I miss on my order aside from examining if I made a mistake in my calculations.
 
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Rangoth

Rangoth

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Exactly the experience I was looking for and exactly what I do. Thanks.

I run into the situation you described a lot where I don’t read the dip right and I’m “bagholding”, but like you said a great name company, for 2-6weeks while I wait for a swing back to my desired exit point. It actually works well for the most part. Sometimes I feel I miss out on the explode to the moon meme shit but whatever.

the one piece that I struggle with the “wait or sell a CC right away” topic is like you described. Let’s say my exit is 51 but it’s at 50.75. Sometimes I feel like if I wait and try to catch a temporary increase I can still sell the call at 51 but during that window when it rises to 52.50 so the intrinsic value is higher thus making a better premium. At that point I’m betting it will swing down and not keep rising but I am able to maximize profit during that swing.

but if I sell the CC at the start of the month I am still profitable but I miss out on that huge bonus by waiting for a brief uptick.
Timing sucks :(
 
Sanrith Descartes

Sanrith Descartes

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Rangoth said:
Exactly the experience I was looking for and exactly what I do. Thanks.

I run into the situation you described a lot where I don’t read the dip right and I’m “bagholding”, but like you said a great name company, for 2-6weeks while I wait for a swing back to my desired exit point. It actually works well for the most part. Sometimes I feel I miss out on the explode to the moon meme shit but whatever.

the one piece that I struggle with the “wait or sell a CC right away” topic is like you described. Let’s say my exit is 51 but it’s at 50.75. Sometimes I feel like if I wait and try to catch a temporary increase I can still sell the call at 51 but during that window when it rises to 52.50 so the intrinsic value is higher thus making a better premium. At that point I’m betting it will swing down and not keep rising but I am able to maximize profit during that swing.

but if I sell the CC at the start of the month I am still profitable but I miss out on that huge bonus by waiting for a brief uptick.
Timing sucks :(
Click to expand...
To be honest I treat each case differently. I examine charts and calculate the various support and resistance and then decide how "quick" I want out. It's one reason I tend to use weekly calls and refresh them each week instead of monthly. I also look at earnings dates div ex dates and built the exit around it. Sometimes I really don't want to get exercised and go way out if the money just to grab a little bit of extra alpha while holding.
 
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Fogel

Fogel

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I look for resistance levels and wait for the stock to approach that level before selling the CC. You won't always be able to get a good premium because the longer you wait for it to approach resistance, the more theta is eating at any potential premium. I skipped several weeks not selling PLTR CCs because the timing wasn't there for the gap ups toward resistance. FUBO however I've had a ton of luck selling CCs weekly for very good premium but it's a bit more volatile. I'm also more aggressive on my CCs as if I get assigned I put the cash back into selling puts on the same stock.
 
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Rangoth

Rangoth

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Thanks all! Kind of what i expected in that there is no perfect answer. Need to keep playing it case by case.
 
Fogel

Fogel

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If cruise/airlines have another red day on monday I'll sell more puts. NCLH for example dropped below 25$ in after hours, would love to to see it near 24.00 before selling puts on it.
 
Sanrith Descartes

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Good chance I will be owning some donuts on Friday after today's ass-whupping.
 
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Fogel

Fogel

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Bought NCLH calls on the dip at 23.50 sep 17 expiry .92 premium
 
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Rangoth

Rangoth

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I bought 4 (F) at 12.50. Not a huge premium, but honestly i want to get assigned at that price. Kinda hoping it dropsa bit more.

I know short trader McAwesome makes my 2% a day, but i placed that put at 1.1%. So i, happy either way! And this goes back to my goals , 2% a week is 100% a year so i should write a book. I obviously dont hit it every week but i come so close to many times.

But id rather gain small than lose big.
 
Sanrith Descartes

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Rangoth said:
I bought 4 (F) at 12.50. Not a huge premium, but honestly i want to get assigned at that price. Kinda hoping it dropsa bit more.

I know short trader McAwesome makes my 2% a day, but i placed that put at 1.1%. So i, happy either way! And this goes back to my goals , 2% a week is 100% a year so i should write a book. I obviously dont hit it every week but i come so close to many times.

But id rather gain small than lose big.
Click to expand...
When you say bought and want to get assigned, did you mean you sold puts?
 
Sanrith Descartes

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Fogel said:
Bought some SNAP calls 75$ 10/15 expiry
Click to expand...
Dice Vegas GIF by The Weeknd
 
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