Time to learn more...options (Page 3 of 5)
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Originally Posted By Morgan321: Timing is always a problem that you can't solve. I've found the large issue is deciding which method you want to use to generate profit. ie. do you want to collect premiums on options unlikely to execute? Do you want to sell puts/calls in lieu of limit orders when you don't have to buy/sell at any particular time? Or do you want to actively trade options to profit on the change in premiums? I've found there is a strong tendency to start with one of those goals in mind and then, if/when the market moves differently than you anticipated, you change your motivation to one of the other options. If you start from a position where any of the three options will be profitable you can avoid losing, but you will also limit your upside. I like to think of what I do as a modified and highly flexible variation of the wheel strategy. The basic strategy is best suited for a flat or slightly bullish market so being too strict would have just left one in the dust in a solid bull market like we’ve had the last few years. I’ll generally enter positions via cash secured puts with my strikes being largely based on how much I actually want to own the shares. Once assigned I’ll almost always select strikes higher than I used for my puts. I want to make money on the puts, share price appreciation and the calls. In much the same way as the puts I’ll select call strikes based in part on how much I want to sell the shares. I’ll still sell calls on even on my long term holds but select low deltas so I don’t have to manage them as much. If I have some shares I’ve held for at least 6 months I’ll usually get less aggressive with my calls, even if I wouldn’t mind selling them, just to push the hold past 1 year making the gain on appreciation long term. Everything is subject to modification along the way. Being flexible is key IMO. After you follow a stock for a while you start to get a feel how it responds to news, macro, earnings, ect and can get a good idea what it’s capable of. |
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Originally Posted By Procat: ..Being flexible is key IMO.. Huge difference between "I lost money" and "I made $x but could've made more if only I had....." Another issue with the ultra-conservative path is that commissions eat up a larger fraction of your profit. Sell an $11 option and that $0.65 commission eats 6% of your profit! Sell a $110 option and that $0.65 commission is lost in the noise. I think a big part of my issue is that I always tend towards shorter-terms. I think it's because that "feels" safer due to the shorter time window. But the premiums scale well to time horizon - ie. a 1 month option is roughly twice the 2 week option for similar mathematical risk. I thought I was working your "wheel" strategy, but none of my puts have executed! My pltr puts are ultra-conservative ($100-120 strikes) and my ibit puts have been getting more aggressive but still none have been hit. ETA: Made out today, sold some $47 ibit puts expiring in 5 days for $56 each. Bought them back 4 hours later for $22 each. 0.7% profit on idle cash in 4 hours. |
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Today marks 1 month of selling puts on IBIT. In the last 30 days I've collected $304 in premiums and spent $48 closing positions for a net profit of $256. I've played it pretty conservative and have had nothing executed. At most I've had 5 puts at once in the high $40 range, roughly $23k of cash securing the puts. If my math is correct that is about 13% annual profit on top of the 3.8% fidelity pays on cash! Had a close call with last week's big bitcoin dip - had 5 calls and a couple went in the money but it recovered quickly. The most important thing I've learned is patience - let the volatility and time work in your favor. Second most important is to not hesitate to take a profit. |
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Originally Posted By Procat: ETA: Sold 1 this morning at an even higher price. https://www.ar15.com/media/mediaFiles/489576/IMG_5167_jpeg-3662167.JPG Bought to close this morning for $95 |
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Sold some $5 cash secured puts on $VG / Venture Global today for $0.25 for January 16th. Stock was around $5.77 at the time. If unassigned that’s an 5% return in exactly one month. If assigned I get the shares for $4.75. I’d be fine with either. ETA 1/2: bought to close for $0.01 |
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About 2 weeks ago I sold some PLTR puts that were 6 weeks out for around $50, closed them today for $30 profit each rather than wait a month for the other $20. That's only in the 2% range of annual profit(around 6% with interest on the cash), but the strike was so low it would never have executed. |
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I still have a few hundred fbtc and am still selling calls on them.... The options on fbtc are weird since the volume is crazy low. I honestly think there are some FBTC options trades made based on type-o's or people who don't know what they are doing. I sold FBTC covered calls yesterday expiring 8 weeks out for $116 - there was zero volume. This morning I closed them at a cost of $80 and there was zero volume prior to my trade. $35 profit per option overnight, the numbers say my profit should've been about $20-25 each. I think this is caused by the very wide bid/ask spreads that exist due to the ultra low volume of FBTC options. So now when I trade FBTC options I put in limit orders at unlikely prices and change them after a minute or two, inching towards the actual price I want. This usually nets me a better price. |
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Sold a bunch of $SOFI $25 cash secured puts for 2/20/26. Premiums are good and I wouldn’t mind shares at that price if it dips. Even if the stock drops in the short term it’s highly likely they get added to the S&P this year which should pump the stock. Attached File |
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How are we playing the PLTR earnings call on 2 Feb? Looking at weekly puts they increase sharply in price for expirations on 6 Feb (earnings on 2 Feb). I assume they will beat earnings, but they did last time and the stock didn't move much. Seems that it is so overpriced that the market reacts in a skewed manner to PLTR earnings. ie. a tiny miss would crater PLTR but even a significant beat would not cause much of a spike. So I'm hesitant to buy aggressively priced puts expiring after the earnings call. I don't want to buy hundreds of shares in the $160-170 range so I'm leaning towards puts in the $140 range. |
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I’d be looking at the 2/20 $150 cash secured put on Palantir if I wanted to play it. At $3.xx it’s around 2% return in a month if unassigned. Delta in the 16 range and looking at the 6 month chart there’s decent support around $150-155. Below 150 strike the premium drops off so if I wasn’t comfortable there I’d probably just do something else. If the stock dropped <$150 I’d just take the shares and sell calls against them, especially with Citi just upgrading them to BUY with a $235 price target. ETA: @Morgan321 are we talking about buying puts or selling them? My reply was based on the idea of selling them. |
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Originally Posted By Procat: ...... are we talking about buying puts or selling them? Is there any reason you always look at the monthly options vs the weekly? I've been very conservative on selling puts so far on pltr. I'm a bit hesitant to get very aggressive on pltr just because of the dollar amounts involved should they execute, that's why I was looking at the $140 range. |
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Originally Posted By Morgan321: Selling. I see that I erroneously typed "buy" above. Is there any reason you always look at the monthly options vs the weekly? The monthly (3rd Friday of the month) will have more volume / liquidity plus it should pay a bit more due to time. Since the price is based on the catalyst of earnings, if the stock goes up after earnings the contract should drop to near worthlessness since its value was based on earnings call risk. Just an approach to squeeze a little more out of such a play. |
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Originally Posted By Procat: I’ve never used that strategy but every example I’ve seen the strike(s) are usually at the money. Yeah, I’ve noticed that. They’re always at the money, first rung above current price in examples. But in the actual stocks (ETFs, really) I’d consider for the strategy, at first glance it would make more sense with a bit higher strike. I’m going to have to pull out the calculator and run some scenarios I think. I’ll dig through some books, too. |
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For me the two parts of the synthetic long don’t really match up. I reserve buying naked calls for only the highest conviction bullish sentiment. On the other hand selling a put I usually do when I’m neutral or only slightly bullish (but wouldn’t mind owning the shares). In most high conviction / bullish sentiment situations I’d rather just buy a call debit spread. That way I know the exact cost, I know the exact max reward and I’m not tying up any extra funds like I would be with a synthetic long (to secure the put). It would be an interesting one to paper trade both ways through a correctly called bullish move on a stock. I suspect if the funds used to secure the put (unless you’re authorized to sell naked puts) are figured into it the % return on a call debit spread would be better on all but parabolic upside moves of the stock. |
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I’d agree that it doesn’t make sense if the puts are secured by cash. At that point just buy shares. More on that below. However, when I sell puts, I secure them with margin. The benefit there is, until the puts are exercised, I pay no interest. I would pay interest on margin if I simply bought shares, which I otherwise usually prefer over options. Filled up a few pages in my math notebook using VOO, Jan 2027 expiry and various combos strikes and future share prices: Lower strike choices result in lower max loss if the underlying goes to zero. Higher strike choices may increase the likelihood the put gets exercised. In scenarios that cause extreme loss, lower strikes have more (still poor) insurance, but the insurance is less than the premium in all such cases. In scenarios that cause a small loss, the loss is least (by a pretty small amount) if chosen at the money, especially if the strike is just below share price at strategy execution. In scenarios that result in a profit, the leverage in comparison to just buying shares with the net debit of the strategy is lower at lower strikes. If the underlying is flat with a slight gain, a higher strike gives up less. Otherwise, there seems to be very little difference in outcomes dependent on strike selection with this strategy. Other takeaways: Losses are worse, and profits are smaller vs buying 100 shares, in all scenarios that I tested. Losses are much worse, and profits much greater, than buying however many shares could be bought with the net debit from premiums. Leverage. Scenarios that would result in small gains using shares will result in small losses using synthetic longs. Much like a leveraged ETF would do. In these scenarios, the greatest opportunity cost vs buying a few shares occurs at lowest strikes. |
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Originally Posted By 1168RGR: However, when I sell puts, I secure them with margin. The benefit there is, until the puts are exercised, I pay no interest. I would pay interest on margin if I simply bought shares, which I otherwise usually prefer over options. I was doing that heavily in 2024 with Fidelity w/ level 2 options enabled. Thought I found an infinite money glitch. I was bringing in about $5k a month selling low delta puts on different tickers. Zero margin interest because no transaction was actually taking place. Party ended when they locked my account claiming it was a trading violation. They tried to get me to margin my long positions (thus owing interest) but instead I just closed enough CSPs to get my cash position above zero. In hindsight I should have asked if upping to level 3 would allow me to sell naked puts but instead I just quit doing that. I have a few tickers looking attractive at current prices. I’ll try to put something together during this 3 day weekend to paper trade them via call debit spreads & synthetic long to see how each strategy performs. |
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Originally Posted By Procat: I was doing that heavily in 2024 with Fidelity w/ level 2 options enabled. Thought I found an infinite money glitch. I was bringing in about $5k a month selling low delta puts on different tickers. Zero margin interest because no transaction was actually taking place. Party ended when they locked my account claiming it was a trading violation. |
| Took yesterday's dip as an opportunity to sell some puts on SOFI and PLTR expiring after their earnings. Very conservatives strikes on the PLTR around the $130 range because history shows that they have to have a blowout earnings report to get a significant boost. |
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Originally Posted By Procat: Sold a couple of the PLTR 2/20 $150 puts that I mentioned before. The price went up from the $3 range into the 4s. I picked very conservative strikes as this is the first time I've bought beyond an earnings release. ETA: should've waited until today to buy! |
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Somebody help me out here because I feel like I'm missing something: I checked out options on silver out of curiosity. I wound up looking at SLV, and it has mon/wed/fri option expirations. SLV is in the $98 range today(monday) and the wednesday (48 hours away) puts at $85 are selling for $85 and the $80 are selling for $40. That is 1% and 0.5% return respectively in two days with the obvious risk that you'll be buying if silver tanks more than 20% (or 15%) in that two days. I can't imagine silver dropping by 20% in 48 hours. Am I missing something? ETA: I guess I'm not missing anything, the volatility of silver lately simply supports the numbers.... |
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Originally Posted By Procat: Nope. It’s just volatility driving the prices up. Lots of silver futures contracts are bought on margin so the buyers are likely buying SLV puts as a hedge. Seems like a gamble, but I’m gonna try a bit of selling 0-2 day puts at more aggressive prices. |
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Originally Posted By Procat: Be careful, silver has a history of making bag holders that can take decades to get back to even. Silver seems (and the numbers agree it is) more volatile so the 0-2 days is enough excitement for me! I’m also curious about why the bid/ask spread seems so large. Is it a byproduct of the extreme volatility? Ie. People put in orders but the price moves away from their limit faster than the market can adapt? |
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Expired and/or closed a few very conservative 0-2 day SLV puts, all profitable. I'm reading up on call debit spreads, the silver bull seems like a good opportunity to test those waters but I have a question: If you have a call debit spread and it closes between your two options you buy the cheaper call.... when that happens it is after the markets close, correct? So you would have to wait until the markets open to sell the shares you bought, is that correct? I chickened out on the PLTR puts and closed them for a tiny profit. Lots of articles about mixed sentiment for the upcoming earnings release and also articles claiming people are reconsidering the sky high valuation. My fear is if they don't beat their earnings and raise guidance by "enough" the stock will tank. |
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Originally Posted By Morgan321: I'm reading up on call debit spreads, the silver bull seems like a good opportunity to test those waters but I have a question: If you have a call debit spread and it closes between your two options you buy the cheaper call.... when that happens it is after the markets close, correct? So you would have to wait until the markets open to sell the shares you bought, is that correct? I’ve never had that happen but my understanding is that (with Fidelity) it will exercise the long call if you have the cash to cover it or sell it if you don’t. IMO in such a position I would probably just sell the contracts via limit order on the afternoon of expiration. The short call should be basically worthless and the long call will be near whatever the intrinsic value is. |
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SOFI results this morning - beat estimates and revised the future guidance up the expected amount. But stock is still down 6% today and down about 14% for the month. Have SOFI puts in the $20-22 range expiring today and on 2/20. I fear PLTR may be in the same situation - but PLTR pe ratio is 10x that of SOFI so the effect could be magnified. Closed my pltr puts earlier this week for a small profit, time will tell if that was the best decision. All the bitcoin calls I sold have dropped to almost pennies which is awesome, unfortunately that is beacuse the bitcoin I have is down 5-10% in the last week! I'm glad I don't have any SLV puts to worry about today. Not sure I want to gamble on selling any more silver puts, but a 20% drop in one day makes it tempting! |
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I had some $23 cash secured puts on SOFI expiring today that closed at $0.02 at the open when the price was still pumping. Resold the contracts for 2/20 for $1.25 about an hour later. I have a bunch of CSPs on HOOD & PLTR that are being challenged. I recently trimmed my positions on both at higher prices so if I get assigned I’ll still be better off than if I just held the shares and did nothing. |
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A lot of smart folks here. If you watch the “Tastylive” people on YouTube, they do a variety of multi-leg options strategies with frequent adjustments (no doubt to encourage their brokerage customers to churn out the fees), but they do seem to favor Strangles (Iron Condors w/o the protective long legs). Easier to manage and take profit I presume. And I don’t hear much mention of Cash Secured Puts- I think they would describe them as “cash ineffecient.” (And maybe that’s their brokerage bias again) For me, I’m currently favoring a more mechanical system of periodically writing small-size put verticals (Bullish Put spreads) throughout the week on liquid, uncorrelated ETFs (eg. QQQ, TLT, IWM). (Around 40DTE, around 40 Delta short legs, width approx 10% price of the underlying, profit target @ 50% credit received, closed no matter what after 21 days). But I’m wondering if referencing an hourly or daily chart to set the short strike is more sensible. I guess it depends on how much faith one places on technical analysis- I have found that obvious hourly/ daily pivots are respected to some extent. |
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Well my bitcoin calls expiring in February are awesome, all sold for around $100 and almost all are worth just a few $ now. Unfortunately the puts I sold are not.... All are in the $40-44 strike range on IBIT (which is in the $42 range today) and they all expire on the 13th or 20th. They were ultra conservative when sold, so the premiums were small ($20-50). Never had any execute, much less multiple! Any magic strategies to handle them? |
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Originally Posted By Morgan321:Any magic strategies to handle them? How you manage short options that move against you all depends on what you think the underlying is going to do. You have 3 choices: take assignment, buy to close at a loss or roll. I’d only buy to close at a loss if the thesis was broken and I wanted to be done with the position. If you’re in it for the long haul it might be worth it to just take assignment and then start a covered call campaign on the new shares. You can continue collecting premium from the calls and hopefully eventually collect some on the share appreciation when you sell. Rolling ITM puts I rarely do because when the stock reverses you generally find that you would have made more on share price appreciation had you just taken assignment. If you decide to roll you can just go out in date, keeping the same strike, and collect more premium or roll out in time and down in strike and try to “catch” the stock. I generally don’t like the latter because any premium from the value of time will be negated by the low value of the new put you sell. |
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I closed all my remaining bitcoin calls for pennies yesterday - almost $500 in premiums and $35 to close them all. I thankfully only had a few puts left but all were in the money and expiring very soon. The highest strike was like a $40 put that grew to over $400! I closed all of them for about $1.1k. I made just over $800 in bitcoin premiums in January so I'm only down about $300 for the year. Put expirations were today through the next two weeks, time will tell if closing them all was a wise move or not. I was selling relatively short-term calls and puts on bitcoin specifically because of this situation - a big movement putting me far underwater. So I was playing both sides and the big dip over last 2 weeks left me with only a negligible loss. Crazy to think that just a few weeks ago I was selling very conservative $40-44 puts and now they are in the money and $20 puts are very conservative. I'm going to continue with my bitcoin strategy but target a lower rate of return to play it safer. |
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Originally Posted By Mcar13: A lot of smart folks here. If you watch the “Tastylive” people on YouTube, they do a variety of multi-leg options strategies with frequent adjustments (no doubt to encourage their brokerage customers to churn out the fees), but they do seem to favor Strangles (Iron Condors w/o the protective long legs). Easier to manage and take profit I presume. And I don’t hear much mention of Cash Secured Puts- I think they would describe them as “cash ineffecient.” (And maybe that’s their brokerage bias again) For me, I’m currently favoring a more mechanical system of periodically writing small-size put verticals (Bullish Put spreads) throughout the week on liquid, uncorrelated ETFs (eg. QQQ, TLT, IWM). (Around 40DTE, around 40 Delta short legs, width approx 10% price of the underlying, profit target @ 50% credit received, closed no matter what after 21 days). But I’m wondering if referencing an hourly or daily chart to set the short strike is more sensible. I guess it depends on how much faith one places on technical analysis- I have found that obvious hourly/ daily pivots are respected to some extent. Using T/A to select the strike for the short put strike in a bullish put spread is a solid strategy but I don’t know that I’d use an hourly chart to select it. I say this only because the only price that really matters is the one at expiration. In theory if a stock was frequently hit by the “10:30 slam” you could time your entry to maximize the credit though since both contracts often trade very similarly it might not be worth the effort, especially if you’re sticking with ETFs which won’t have as much beta. Just my 2 cents but admittedly I haven’t used that strategy much. |
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Originally Posted By Mcar13: A lot of smart folks here. If you watch the “Tastylive” people on YouTube, they do a variety of multi-leg options strategies with frequent adjustments (no doubt to encourage their brokerage customers to churn out the fees), but they do seem to favor Strangles (Iron Condors w/o the protective long legs). Easier to manage and take profit I presume. And I don’t hear much mention of Cash Secured Puts- I think they would describe them as “cash ineffecient.” (And maybe that’s their brokerage bias again) For me, I’m currently favoring a more mechanical system of periodically writing small-size put verticals (Bullish Put spreads) throughout the week on liquid, uncorrelated ETFs (eg. QQQ, TLT, IWM). (Around 40DTE, around 40 Delta short legs, width approx 10% price of the underlying, profit target @ 50% credit received, closed no matter what after 21 days). But I’m wondering if referencing an hourly or daily chart to set the short strike is more sensible. I guess it depends on how much faith one places on technical analysis- I have found that obvious hourly/ daily pivots are respected to some extent. As far as cash secured puts they would probably recommend just selling naked puts on futures products. This will tie up a lot less margin than cash secured put on an ETF. The exception would be if you have portfolio margin, then margin requirements are about the same. I like to sell longer DTE and farther out of the money, but I look at a 4 hour and daily chart to get an idea of what the market might do. One thing I would add to your chart is the weekly expected move, I use the SPX move on the /ES chart. If the market hits the upper or lower EM you are pretty safe selling out of the money, surer 2-3 sigma moves happen, but they are the exception. One caveat here, when the EM is wrong, it tends to be wrong for a while, so you need to be careful in the weeks after blowing through a weekly EM. I like to blend EM with technical analysis, but I know people who sell purely based on the EM, and are successful. |
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Well it happened - sold one SOFI put expiring today at $22 and it executed yesterday(ie. early). I sold a call against those shares expiring next month at $21. The premium from the put and the call add up to $101, so $1 profit if it executes. I also had another SOFI put expiring today at $20 (it's around $19 today), I just rolled it out a month and down to $19 for $20 credit. I think the weak SOFI stock is just a byproduct of the broader markets being down rather than any SOFI-specific sentiment. ie. I feel like I'm gaming the market as a whole rather than SOFI specifically. The last of the bitcoin puts I've sold expire today and are well out of the money. |
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Originally Posted By Procat: This week has been odd. I’ve had several cash secured puts get assigned early, more in one week than all times before combined. |
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Originally Posted By Morgan321: Fidelity requires you to call a human to execute early. I’ve wondered if some of the new money sites like robinhood, sofi, etc. allow you to execute early without the hassle of talking to a human? Perhaps you can even set a “limit execute” where it automaticallly exercises if a set price is reached. Originally Posted By Morgan321: Originally Posted By Procat: This week has been odd. I’ve had several cash secured puts get assigned early, more in one week than all times before combined. I know sofi makes you call, Tasty you can e-mail. Schwab is the easiest, you can do it on the website or inside ThinkorSwim. I think Interactive Brokers is on the website. The last few weeks have been interesting in terms of option flow. |
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Pretty sure Robinhood will let you exercise options in the app. @Morgan321 Keep an eye on SOFI in the next 2 weeks. The first Friday in March is when the S&P 500 rebalance announcement comes out and SOFI is a contender. Even if it doesn’t get in I wouldn’t be surprised if it pumps a bit in the days leading up to the announcement. |
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| Yes, Robinhood lets you exercise an option in the app. It’s just a button and then confirmation (IIRC), so about the same level of effort as a market order for shares. Yet, in my limited experience, I never seem to get assigned early. Sometimes I wonder if Robinhood options buyers are even worse than the average about letting their calls expire worthless. |
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Originally Posted By Procat: Keep an eye on SOFI in the next 2 weeks. The first Friday in March is when the S&P 500 rebalance announcement comes out and SOFI is a contender. Even if it doesn’t get in I wouldn’t be surprised if it pumps a bit in the days leading up to the announcement. |
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Originally Posted By Morgan321: Thats why I rolled them out and also why I was sad to see an early execution. Guess I’m looking at SOFI differently. Since I’m bullish on them for 2026 I’m good with getting assigned the shares. My only complaint is that call premiums currently suck so I’ll probably just hold the shares until something causes them to pump, then I’ll start selling calls. I also got assigned on those PLTR $150 puts. Call strikes in 2028 are paying big premiums, it’s tempting to sell them. |
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I was looking at the put premiums for bitcoin yesterday and IBIT was about $5 five minutes before close for a strike at $36.5 while trading at $36.55-58. So I did what any logical person would do and sold 10 puts 2 minutes before the close for $5 each. Closed about 4 cents above the strike for an almost $50 profit in under 5 minutes. Needless to say I don't plan on doing that again. |
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Is anybody selling long term (6 months out to 1-2 years) puts at very low strikes with the goal of collecting premiums but not executing? As an example using the three stocks I've been commonly selling options on, you can get a 3% premium selling a 9 month put on: IBIT at $10 (equal to bitcoin at $18k) PLTR at $40 SOFI at $5 That's a 4% annual return added to the 3.5% yield on the cash securing them for a total of 7.5% yield. I get the seeing the future aspect and don't need to hear "it depends on what you think the stock will do in the future". These three examples seem like pretty safe bets and a good way to diversify - the strikes are all on the order of 30% of current prices and I would buy loads of all three at those strikes. They are also not directly overlapping industries - any of them could experience a black swan event without impacting the others. If the broader stock market drops by 70% in 9 months or less then we've all got bigger problems to deal with. |