Hi all, Wow, first GOOG and now AAPL. Apple was expected to be big. They can't keep inventory on the shelf. I would not be surprised to see a little pull back with Apple. From today’s 380's down to the 370's by Friday night? Just a guess but history show that happens more often than not. Tomorrow I will be making some decision on my appl calendar spreads.
Hope all have made some money this week.
74 comments:
Had 10 APPL 370/380s (selling the 380s that is) .
Saw what that had spiked up to in the after hours after earnings Tues. so I was happy to see it had come down some the next day.
If I were more prudent/level-headed/calculating I would have waited it out but it's just so tough for me when I see a double digit profit ready to be scooped up. Cashed it all out Wed morning for 12.6% ROI. Money in the bank and all. I figure Friday I'll be slapping myself. (then again could be slapping myself anyway for not just making those all straight-up calls right? haha.....20/20 hindsight is an infinite regress of futility and self-pity so best not to go there)
Also made a clean 8+% ROI with that IBM spread you recommended Jerry. Sold that sucker about an hour after I opened it.(though I had made mine a 180/185 and the sold part wasn't worth very much anyway) That was a fantastic tip.
Waiting on AMZN to come down some hopefully to make something out of the 210 cal spread. (I got into that at a bad point...good example of why not to sell calls ITM even if it is trending down on the day you do it)
In other news I have a SLV 40/41 spread that was looking shaky but now seems a lot better. That may be more of a long-term thing.
I've got some AAPL 360/360 diags and
some 365/360 diags too. The big runnup had given the short side a bigger bump (i.e. big losses), but it has turned positive today, and the shorts still have .35-1.00 in premium yet to evaporate.
The diags may be better suited for Buying earlier to get more time value on the short side.
Everybody do OK on there spreads this week? I bit off another SPX spread. This time a put spread with 100pts cush. Sold it for .20 and today I have 125pts cush. Wowee!! I might close it out and find a good 2 day spread. A little GIGO never hurt anyone, right Dave G??
Cheers,
Rick
Amazing Rick, I never ever get good stuff like that! 100 pts cushion and .20 would make me very happy. Is it the 1205/1200? When did you open?
I would let it expire. If you sell it for .05 you're giving away 1%. (I'm assuming this was a 5 point spread?)
Aside from the trades that my newsletter (http://www.monthlycashthruoptions.com/) provides I think I may be done with doing my own vertical credit spreads.
Now granted I have a decent portion of my account allocated to doing those, so it is not at all like I am abandoning the ole option selling idea. But as far as doing my own weeklys?
Sure for the most part I did pretty well with vertical credit spreads. And I think I could continue to do pretty well with them.
But this new idea has so fundamentally changed the psychology of this game it is un-freakin-believable. The biggest reason is this; I am no longer risking thousands to make hundreds, I am risking thousands to make thousands. And the thousands I am risking are thousands I know ahead of time. When you buy those positions you know your max loss. And it is a max loss you are unlikely to experience. And if it goes south you have plenty of time to recover. And in the meantime you can sell against the position and help recover loss, if it goes that way.
I no longer wake up in terror and wonder "what is the pre-market doing??". Gone are the weeks of me feverishly monitoring every movement to make sure that I won't lose my shirt. I am not at all sorry to see that particular activity fade away.
OK granted I have only been doing this 2 weeks now, but I have made more doing these cal and diag spreads in that time than doing my own weeklys in 2 months.
Sorry if I am a bit of a wet blanket here. I just have to call it like I see it. I LOVE this new approach and can't get enough of it. It really does combine the best qualities of traditional equity investment with a savvy hedge, but without actually having to own the equities of course. I feel I am just getting started with this approach. Seems there are so many deep conservative plays available that can almost guarantee income every week.
Anyway, who knows. Maybe I am full of sheisse and will be coming right back to the old ways soon enough after I get my arse kicked good here. I dunno. Just had to speak my piece.
Way to go Gremjun,
Sorry if I'm being a little thick but specifically what is the "new idea" you mention.
Also, how long have you been using the newsletter and what's your first hand opinion.
Thanks
Wish I had those AAPL calls straight up as well. Hindsight, can't beat it! Now I wait to see if Fri brings $ on the calendar spread I have instead. Maybe these work better on a 'flatter' stock. ie neutral play.
Rick, I would never fault anyone for closing out any trade for a profit whether it be a GIGO or just holding a winning spread trade to expiration. I wish you many, many successful trades, my friend!
I spoke too soon. The drop in AAPL today has the long leg with ZERO time premium, and the short side has gone down more. I'm upside down $900 on 12 contracts. Maybe it will bounce back tomorrow. Thanks for the kind words!!
As for GIGO, I'm trying to sell my SPX 1225/1230 ($0 - 0.05 on each) for $0. I have gotten fills before here, but I might have to give them a nickel. The SPX 1375/1380 calls were getting .20 earlier. 35pts in one day sounds safe to me.
Rick
Hi all - I'm trying to follow your trades to learn a bit. What's the symbol for the SPY and SPX you guys seem to love?
My best guess is $INX and $OEX?
Rick, please keep a close track on SPX and your 1375, I was looking at that one but felt it was too close. SPX is at 1347 right now and Boehner just said that a debt deal could be close.
This week SPX closes at end of market, right? So its more about 30 points for about 1.5 days.
Gremjun, I wish I could share your enthusiasm here, but my tests have been a little unclear on both the advantages and risks.
I may be doing something wrong, but I've been looking at AAPL historically and in my tests the long call has eroded about 1:2, i.e. for every two dollars the stock goes down the long premium drops a dollar. If you make 4-5 dollars premium (most weeks it seems to be closer to one dollar or below though) it only takes a 10 dollar drop on average for the profit to be gone, after that it starts to generate losses fast, and over a week AAPL can be pretty volatile.
I seem to be the only one concerned about this so I'm obviously missing something or calculating this the wrong way, but I would love for someone to explain it to me.
You say you know your max loss, but that's the same with spreads, right? I also don't understand the part where you don't have to monitor the market moves as closely, as a significant drop in the stock would incur a significant loss, and this unfortunately holds true the other way as well, a significant jump also means losses.
I certainly don't want to rain on anyone's parade here, but to me this sounds awfully similar to regular options trading with all the risks and opportunities that involves. I'm not saying that is wrong any way, it's just that it seems to be a far cry from the safety, cushion and crumbs that we've all been so focused on, where greed was our biggest enemy. I think what concerns me most is that since those values have been the staple of this board, there may be inexperienced people (like me) that are led to believe that these kind of diagonals and calendars are equally safe and a better alternative. Unless of course they really are, and then I want in as well. :-)
@Nic
My recent experience has me agreeing with you. In one account I am doing an AAPL 365/365 calendar which is scaring the stuffin' out of me. In my other account are a couple of 'safe' call spreads on NFLX and PCLN yielding about 3% for the week with little concern. So I'm not ready to abandon the 'crumbs' tactics just yet and find solace in knowing that if the calendar spread doesn't work out, I can struggle back one crumb at a time.
ok disregard my post - it's just Tradestation that doesn't like SPX and has a different symbol for it for some reason.
Josh, I also use TradeStation and CBOE products like the SPX and VIX begin with a $ and end with a .X (ex. $SPX.X and $VIX.X) as you probably already found out.
Nic, Safe and simple,
I think we have to see what happens to the calendar/diagonal spreads when the market is correcting to have a better understanding of the potential pitfalls of these strategies. For me, I am experimenting with buying the longest dated LEAPS options on a particular stock with a minimal delta of 0.8 and using that as a stock surrogate. Then I am looking to sell weekly calls but not on a 1 to 1 ratio. For example, to buy 400 shares of apple would require outlay of 387.1 x 400=154,840. Instead I would buy 4 of the Jan 13 300 LEAP for 111.95x100x4=$44,780. This LEAP has a current delta of 0.8 and time value of $24.85 (300+111.95-387.1) so my effective purchase price is $411.95 (300+111.95). So I control 400 shares of appl for almost 1/4 the capitol needed to buy the shares outright. Now, I will sell the weekly ATM call (this week 390 strike) for $4 but only sell 3 of them. I will collect $1200 if appl is below 390 next friday and will use the $1200 to reduce cost basis of $44,780. I have 72 weeks to sell premium and my goal is to reduce the $44,780 by as much as I can. If you plot this trade out in thinkorswim, you will see that if apple moves up significantly, you will still make money, b/c only 3 calls are sold against 4 long LEAPS so the extra long LEAP protects against a significant rise in the stock (of course you will have to roll the short calls to the following week if they go in the money). IF aapl tanks, the long leap will lose value, but since it is so deep in the money, you can sell calls all the way down to $300 strike. From all of my research, this is the most conservative way that I have found to trade these long dated LEAPS. What do you guys think of this strategy?
Spontaneously I like it, Ongba.
The problem with simulating this in thinkorswim is that you really have to do it in real time, stepping forward day by day, to get a realistic effect. I started a random day in April, and immediately took a horrendous hit (not using your model) as AAPL dropped 20 points that week. I think that the same old rules with never letting the premium double and never letting the short call become ITM certainly helps, but a big problem is the drop in the long call, I will have to look in to the effect of having it so far out as 2013.
great conversation guys.....just my 2 cents on the calendar spreads like this week yes you can do well if the short option has lots of volatility like during earnings but calendar spread is a neutral strategy where you want it to stay in profit range or you lose money(or dont make money on the way up) because the ATM short options moves faster than long option..if doing far out ITM long calls like LEAP pay attention to how much volatiliy is priced into or it can be very painful loss in your long call from drop in volatility even if the stock never moves..... diagonals are more of a directional bet obviously to see some benefit with the move but you are still making a bet on direction and exposed to time decay so different strategy than being an premium seller like spreads...
Nic,
Good call on the SPX call spread. SPX is on another run... My thought now is another put spread about 40pts out.
I sure thought these Diag spreads were gonna be great. The AAPL diags are eating my lunch.
But the juice in PCLN just OTM next week is $9 bucks. Wow!!
rick
Jerry, Correct me if I am wrong.
You can still make money if the stock price pulls back a bit using the call calendar/diag trade. The price of the longer dated BTO call option needs monitored in a pullback situation. (the weekly sold option will expire worthless anyway and now its just a matter of how much the long dated call option drops.)
The other idea is that if you feel that an equity will drop in price couldn't you simply buy longer dated put and sell weekly put? I have never done this trade. Anyone bearish?
Hope everyone is in the clear for the week.
Cheers, RK
Anyone here thinking about doing an IC on SPX this week? I'm happy with the 1.3% ROI for the week, but my greedy side isn't.
Henry,
I just rolled my 1230/1235 SPX put to 1320/1325 for .20. I think the market wants to go up, and I don't think it will give up 20pts after up 19 today.
I saw that the 1320/1325/1375/1380 IC is getting .40 cents!!
...but I've been scary wrong before, thus the scull & crossbones ;-)
rick
Henry, I wasn't 100% comfortable with 1375 and after they went 25 point spreads. For some reason Optionhouse can't convert that to my lower 5 point spreads, I was hoping every ten of my 5 points would equal 2 25 points in the IC but it sees it as new maintenance.
Anyway, moot now, there won't be any value left in the 1375 in the morning I guess.
It seems like the market wants to go higher. I'm happy with the returns for the week so no new trades until next week.
hmmm? Wants to go higher? Tomorrow Friday, double top everywhere I look and no deal on Debt ceiling still,
only bragging. We should see pull back tomorrow. IMHO
Right. Market will know what it wants to do at 9:31 am. Plenty of cushion peeps!
ps, also do not see logic in gremjuns strategy, granted Im not all THAT bright
Hi all Wednesday I rolled my appl spreads into the 390's
When doing this I lost about 1 on each of the 355 & 360's I opened the 390's with a 4 prem still left for this week and with aapl seeming to be stable at this level for the week, I will clear around 3 on each. Hopefully aapl will close around 389 I have not tried these cal spreads with spx yet? Monday will be new-play day.
Gremjun said...
Had 10 APPL 370/380s (selling the 380s that is) .
=================================
Hello,
Can you please elaborate, is this Calls you are talking about?
Let's go to Tninkorswim now to AAPL
and based on today closing prices, sell nearest 390 July (Jul5 11)weekly at 3.80
and buy 400 strike Jan 12 for $24.65
Let's say price of AAPL closed next week at $385 and you get your 3.80 (as it expired worthless)credit now, go back to Jan, and see what is the price difference between each line on calls, now your 400 calls worth 22.30 (bid), which means you lose 2.35, so basically what you made is difference between 3.80-2.35= 1.45 and that's only, if everything goes perfect. Now, if you instead of Jan 12 400 calls bought AUG 400 calls it will cost you $4.95, let's do same scenario.. and say AAPL closed week out of the money at $385 now your 400$ Call worth $3.50 (Ask), so you lose 4.95 - 3.50 = 1.45, Now calculate profit gain 3.80 (from July Credit), loss 1.45, total gain = $2.35.. Now why the heck you should invest in Jan 12 Calls for about 4.5 MORE MONEY and even less profit??? Explain to me please, I don't get it.. Since weekly will expire in 1 week anyhow, why pay 4.5 more money for Jan 12 Calls and get less profit?
Thank you.
I know you might say in 1 week August calls will also drain a bit value,
well then buy September at least
not January and you will still do 40% and will not waste so much money on the LEAPS.
And if APPL in my example close next week below 380 or above 398, you lose either way.. Wider it goes out of that range, more you lose. Of course you can say I'll close my trades quickly, well, that's not the case with AAPL, it could open
higher 10$ or lower 7$, very next day, then what you going to do??
Lose/Lose strategy.
Do you really believe that AAPL could
trade in such a narrow range whole week? I don't think so.
@Nic
I didn't mean that I don't have to monitor this stuff at all; I do monitor it very closely if it is getting near the sweet spot. All in all I guess I am saying that it is more of a happy monitoring experience for me. I am scrutinizing the spread to try and maximize my gain; not to avoid horrible loss in the case of the vert. spreads. And yes I know that there is a max loss for credit spreads of course but I feel a lot better with a (Max Loss of 20k/Max gain of 10K position) than I do a (Max Loss 10K/Max Gain one hundred bucks) position. I know that the probabilities are not on my side nearly as much with many of these but the *far* better risk/reward ratio to me, at least, justifies it.
The other point I want to raise is that in the case of the significant jump, there are losses of course but they are controlled by the bought part generally tracking along. Every time now I thought I was going to have losses from *too* much gain, the stock has come down. Obviously it won't always be this way. Gap-ups as we have seen in these earnings scenarios have been the chief culprit here, so won't have to worry about those *quite* as much in regular trading times? At least that is my hope.
@ongba
I like your strategy. I will strongly consider trying something like this out. I probably should move to a more conservative implementation of this strategy.
@Skyzer
Yes these are all calls. The Jan calls are in case the stock goes south. That way you have a lot of time to recover. If you pick August and it dives good luck on recovery chances.....
Gremjun, I'm not sure I follow. How do you calculate you max gains and losses? Is the max gain your sold call?
@Gramjun
I appreciate your thoughts on this discussion about calendars, naked puts, and spreads. But like most who sell puts today, I started out selling covered calls and doing the calendar spreads. Fidelity, my broker, puts out a nice report from S&P every day on the best CCs and Calendars for the day. The returns are appealing and they look great on the screen. However, in reality, results were below my expectations. First, there is the issue of cushion. It's hard to get good returns with 20 % cushion. I agree with you that doing naked puts makes me/us a bit nervous of what the market will do overnight, but so far the results speak for themselves. I'm still new at selling naked puts and doing the spreads, but I can't think of any other main stream strategy that will give us superior returns, consistently, with decent downside protection. I know selling puts is not perfect, and I still fear that this can hurt me if I'm not careful. However, this is the first time in my life that I'm not only trading profitably but also paying my bills with the premiums (or crumbs, however you want to call it) I'm collecting from Wall Street. This is a great feeling! Specially, considering the fact that I have already blown away two accounts trying to make a living day trading three years ago (not to mention all the I've spent in courses, books, platforms, etc). Selling puts today is definitely an improvement in my trading approach. I thank Jerry for his book and all you guys for this blog, which I've been reading it every day for the couple of weeks and learning so much with each one's experience out there in the arena killing a lion every day (or every week as the weeklies became a more popular approach among most of you). In fact, you guys here are the first bunch of traders that I came to "know" that actually are profitable in this business - considering that Goldman Sachs no longer claims to have an edge on trading this is no small accomplishment; I wonder if anyone there ever thought of selling naked puts lol.
@ Nic
Well the max losses are easy as that's just the cost of the debit spread.
As far as the gains, I just use the ToS Risk Profile tool to calculate it, as I guess I am too lazy to do it the old fashioned way.
But a real example I just tried, would be something like an AAPL Jan12 390/July5 11 400 diagonal. The spread costs 28.02.
Max gain would be at 400 on 7/30/11 (no time value left for the sold part and no intrinsic value either) for around $750.00 so over 25% ROI. The profitable range I am seeing extends from around 386.6 to 420. If it got anywhere near 400 before the weekly expiration I would probably still close it out though; even on the first day of the trade it would be worth about $320.00 so still over 10% profit.(at 400)
Obviously that example is a pretty bullish strategy. 390/395 would be somewhat less bullsih; 390/390 more neutral.
Risk Profile tool has been my best friend as a trader for awhile now; I never leave home without it! :-P
@ Paul
I never do naked Puts so you must be confusing me with others here! But I don't exclusively do calendar or diags either. I still do a healthy amount of vertical credit spreads (mostly done through my autotrade newsletter which has a much better track record than I do with those trades).
I'll probably fall flat on my face though in a month or 2 though and just go back to the old ways.....guess I'll see!
@Gremjun
But a real example I just tried, would be something like an
AAPL Jan12 390/July5 11 400 diagonal. The spread costs 28.02.
==============================
Not bad, but the Risk Profile VISUAL tool instead of JAN,
OCT 400 calls look perfect on the picture (symetrical triangle)
The only thing I can think of if is Debt Ceiling Rise over weekend,
which could pump stocks sraight up.
I might have to close my bear call spreads on SPY AUG 142/138
and DIA AUG 133/130 I was trying to wait for a pool back
and place another leg of those Iron condors (bull put spreads on the low end,
but there is no pull back in the last 4-5 days, probably
have to close it before is too late (for loss) or roll over higher?
Or setup bull put spreads instead,
but I'd like to do that on the pull back, while puts are worth more.
Any suggestions are welcome,
Thank you.
Ohh, and I might Sell CAT naked puts today, while stock pulled back
on missed, but still good earnings.
This market just seems to want to run higher no matter what. My AAPL 365/365 calendar spread is down 1.5k. Don't know whether to close out today or roll to prolong the agony. Should the congress actually reach an agreement over the weekend or next week, the market will probably roar ahead, further exacerbating an already unhappy position. Can't afford to move up in strike on the short side. Missed a chance to get out yesterday morning at even. Kicked myself all day. This is not good for self esteem. What to do?
@safensimple
My AAPL 365/365 calendar spread is down 1.5k
==================================
I'd probably close CALL you (sold)
(1 site) and let the other site (call you bought ) running, cause more likely AAPL will
hit $400+ next week this way your other 365 call will gain another 13$+ (per contract) and you will even make some money at the end instead of the loss.
how's that sound?
jan 12 and jul29's NFLX 280's calendar spread (calls) entered today
@Skyzer
Thanks for the advise. Can't really afford to do that. Need the proceeds from the longs to buy the shorts.Under capitalized, as usual. Thanks tho, I'm sure the long calls on AAPL would be great to own outright.
I'm glad I closed my AAPL Calendar 370/370 Jul11/Jan12 on Wednesday.
I let one day pass after earnings to see if I would pass breaking even to see if the time decay on the short call would kick in, but it didn't and AAPL stock not selling off a little and today moving up doesn't help it.
Calendars are definitely for betting on a neutral outcome and a small diagonal i.e. 5 or 10pt spread may not be enough to make money it the stock shoots up like AAPL did, hence, Calendar and Diagonals are not good thru earnings.
@Chelski,
I agree with you. I find the same.. Calendar is not good play through earnings. You may need to close the calendar prior to earnings report or open after the event. that's my learning from this week's play.
Gremjun,
I must be entering it wrong in the risk profile tool. I typed in Jan12@390 and next week at 400 just to see (realizing numbers have changed since you did it), but a get a risk of about $2,800 (the debit cost) and a max profit of about $220 at about $402. I start loosing money if it goes above 416 but also when it goes under 390?? Do you get the same result? The drop is fast as well so it doesn't make sense.
Sold CAT naked 90 AUG puts
in the morning at 0.33
6 hours later it's worth 0.18, almost doubled.
YHOO working too, sold bunch 13 naked AUG puts, I mean, I don't mind to own
Yahoo at 13 anyhow, + it's at $14 now
I feel like, you gotta Sold naked puts on Top notch companies like
COKE for example (KO), worse case scenario, you end up holding high quality stock at much lower price.
All credits goes to Jerry!
The only thing I miss it's run up in AAPL, set limit order for 400/400 calendar and it run away from me, not reaching my target just 1 single penny, while I was in the store.. And it's really taking off now.. If I get too greedy I might just buy AUG 400 calls and that's it
Have a great weekend everyone.
Just bought AAPL AUG 400 calls, this thing will hit $420-450 by end of AUG
I feel. Will hedge is something goes wrong later.. ;)
@All, I posted earlier in the week of the 1230/1225 put spread for .20. I did end up pulling the trigger on this. These will expire today for sure. I tried to open up the call side to get and IC going but couldn't get a fill at a safe position.
All in all for this week my ROI was 3.2% after comm / 4% before .. dam you comm's ..
Able to salvage 1 naked call AAPL365 from my 365/365 calendar spread. So now AAPL can go down 'cause I own it. But if projections as above prove correct, then maybe I can repair some of the damage. Call spreads on NFLX/PCLN just boringly added 3.3% to my other account for the week. Maybe that's a better way to go for me! I don't really like spending all day at the computer, and I hate to worry.
Hi all,
As stated before. the 370/370 AAPL calendar call, cost me about $2ea, or about a 10% loss.
However, the AMZN 215/210 earned about $2.25 (8% gain)
and my fav, the SPX 1230/1235 put spread earned .20 (4% !!)
Given the AMZN pretty much covered the AAPL loss, and my biggest position was the SPX spread, I made about 2$ for the week. I'm happy!!
For next week, I have the PCLN 530/535 Diag using JUL/OCT. $7 in time value on the long call.
WARNING - Amazon announces earnings next Tuesday.
rick
Man! lots of comments good and bad about cal spreads I am by no means an expert but here's my 2 cents. I have seen more success by widening the spread actually a diagonal spread.
Most of the time I buy calls ITM 2-4 strikes and sell OTM 2-4 strikes doing this usually results in the delta of the long about 2 times that of the short so if you get a big pop the stock has room to run and keeps the trade profitable. I did this last week with GOOG before earnings, stock was about 540 I BTO Sep535 and STO Jul22 565, debit was 2250.00 closed it thurs afternoon for 3100.00 with GOOG at 593 . So you can have a big pop and still stay profitable.Normally I go out 6 mon or so for the long but I wanted to keep the cost down with the earnings coming out in case of bad news. You give up some prem. but you will profit if slightly down, nuetral or even up a lot, of course if price goes down you still have the prem. but a loss in the long call which you can continue to sell calls against until you can get out of the trade. I have did a lot of these in the last 4 months with good results, I do have some losers and may close out a few with a small loss but thats options trading for you. These things aren't perfect but they are another good tool.
I am happy with the strategy of selling put spread to collect crumb. Safe and simple :)
So far my manage to maintain the ROI (of total fund after comm) at 1.3% to 1.5% for 3 weeks in a row. Boring trades, but I don't have to sit in front of the computer all day long! Most importantly, I don't have to worry about it. As long as I can make 4% per month, I am happy :)
p/s: Must thank Jerry for introducing crumb method!
Hi Dave G
On Thursday 14th July I STO the weekly puts 22/7 SPX 1200 for 0.70 (SPX was at 1322)
On Thursday 21 July I STO the weekly puts 22/7 SPX 1275 for 0.10 (SPX was at 1344)
Both expired worthless.
On Thursday 21st July I STO the weekly puts 29/7 SPX 1225 for 0.40 (SPX was at 1343)
Your variation of Jerry’s system of picking crumbs works for me. Thanks.
CORRECTION TO ABOVE
I made 2%, not 2$, for the week, and the $7 time value is in the SHORT leg of the PCLN diag spread....but you sharp cookies on this blog probably caught that already.
sorry..
@Avelino.
I know those SPX are safe bet, but I cannot pull the trigger on those, if Market will move quickly against you, I don't think anyone can sit tight and play Russian Roulette "Wold I lose my entire account" or it close above my naked put? Risking whole Account to make 2%, especially on weekly, cannot do anything there: not enough time.. On one hand 600-700 $ for which you got to sell 20-30 naked put contracts, after that, move your cursor to the left and, if you cannot stay still loss could be like 40-50-70k and By the way, on my Risk profile it's still showing 1.91% probability, I won't bet my account on it, it's crazy. I'm looking at 1225 puts now. I'd think about twice about that, better do Vertical much higher and be safe.
Now question: how many 600$ trade you'll need to make for one 60000$ LOSS ones it finished up in the money (2% chances still there).
Not a lot of cush but this is a I will take the stock IF happens.
Aug 50/47.50 puts INFA .32
Aug 52.50/50.00 puts INFA .57
Aug 55.00/52.50 puts INFA .90
Aug 55.00/50.00 puts INFA 1.47
I will be doing one of the last two.
Was my Apocolypse Correctable ??
Many of you know of my 7/1 loss on SPX spreads going Deep in the money. I have had several friends suggest that I had several options. No pun intended. When I last called OH with an hr to go, he said there was nothing that could be done because "I was too deep". Wait. These were $5 spreads so no matter how high SPX goes I'm never more than $5 deep. I should have been able to roll one week ATM for a $2.5 credit or month for $3 credit. That's a 60% savings!! What am I missing.
I know some here suggested I had options. When you are away from PC you tend to believe what "experts" say on the phone. Was he wrong??
Thanks for any insight.
Rick
i think u wont be able to role it as u have to spend 5 dollars per spread to close the spread or more than 5 dollars to close the short leg of spread for role over,which mean u will be left with only 40k in your account.
thanks
Rick
You could have rolled as far as Jan 2013 and up or down MANY strikes and still had a credit. Sure it's dead money for a wile but it's still yours.
I know brokers tell you they don't advise or can't but OH telling you NOTHING can be done is mind boggling IMHO.
Did not want to say this befor but you asked.
Rick,
Tell me what you closed out and the day you opened it and I will go back in time on Think back and see what you could have done.
Also note it is MUCH easier to roll naked than it is to roll spreads. So wile naked is much more dangers it's also the easiest to fix with leaps.
Raging,
Raging,
My worst position was 200 1320/1325 SPX call spread @.20 STO on 6/27.
Yesterday when the SPX was around 1345, similar 7/1, I set up an order to BUY the 1320/1325 call spread (200x). It showed a debit of 100K, on the same order ticket(as in a roll), I SOLD the 7/29 1345/1350 @$2.5 for net debit of only $50K. i.e. I could have saved HALF in one week, and the SPX tanked as I recall.
Rolling to OCT, also ATM, the spread was $2.95, and the net debit was down to almost $40K, or a $60K savings. Again, I could have gotten out when the SPX went back down.
You are also right, that there were many other options to go out further, and up/down and actually resulted in a net CREDIT!!!!
Thanks so much for the help!!
rick (dumb ass??)
I'm certainly no expert, but I did get hit too, so I'm also really interested to hear what could have been done. If for nothing else for future situations.
But correct me if I'm wrong but when you are 5 bucks in, that money is lost. Isn't rolling just closing the trade and then opening a similar one so far into the future that the premium is the same (i.e. you could do that today if you wanted to). Or is the point that you can use the same maintenance?
Nic,
The maint is the key here.
Yes, the money was gone, but;
On 7/1 I had 200 SPX spreads, and I should have been able to roll 200 contracts. I am assuming. Anyone confirm?
thx
rick
@Ying I'm with you on the 4% per month using weeklys. Sometimes I can get more depending on what they offer and if i can open up an IC safely for the last 2 days of trading.
@All, I'm glad to see most everyone had some positive on their trades this week. Good luck next week.
As always I will be looking at the SPX. I will be looking at the 1255/1260 or the 1260/1265, which ever will spit out .10. This will all depend on the open on Monday. These positions give me around 80+ points of cushion for the week.
Bald Harley,
Let's assume u sold 200 contracts of spx call1320/1325 for which u got 0.20 that means your account value increased from 100000 to 102000.once spx touches 1325 then your 100000 is gone as u have to pay 5 dollars to close or roleover the spread. U can utilize only 2000 left for any other play wether role over next month or next year.u can use additional funds to roll over or sell next month spread,but since all of your money was in play at different level don't think u could have done anything different to decrease the loss.
So what you're saying, doctorali, is that he could have done up until the point the options went ITM, but after that it would be too late dollar by dollar in.
That's correct and theres a mistake the account size will increase to 104000 instead of 102000 from 100000 as one gets 0.20 each for 200 contracts which equal 4000.
That is actually a bit frustrating news to me. I had the 1330 and when it was at 1331 I basically gave up hoped for a eod sell-off that never came. But if I understand you correctly I could have at that point rolled 80% of it. That would have changed a lot since SPX went down the week after, but even if it didn't it couldn't gone worse, right?
Bummer.
@Fulgore
Watch out for the puts on SPX next week as our 'disfunctional' congress will not solve the debt issue to the satisfaction of the markets. 80 points is nothing if the problem persists. I'm sitting out this week til they do SOMETHING. You Canadians seem still able to handle problems, we are inept.
@safensimple
Indeed,
Talking about SPX (weekly)
Idea is to lower the risk, as we
are trying to make conservative, more probability profits off option plays..
betting $60K to win $600??? Sure it could
work out many times, but ones, everything
you've made will be wiped out +
more
in one single "unplanned" event.
Those options are priced for the reason..
Try suck something out from COKE (KO).. Cannot get anything from those options.. See? There is no free lunch out there.. Always look for what you can loose, rater than what you can win. IMHO.. GL for all.
@Bald Harley
"On 7/1 I had 200 SPX spreads, and I should have been able to roll 200 contracts. I am assuming. Anyone confirm? "
=============================
Do you even realize what 200 SPX spread means commission vise?
Minimum commissions is about
$400 to just trying to move this pile of S*t (Even at IB) So you wanna spend $400 + loss and take another $400 in commissions and fees to roll it over and automatically another $400 in commissions to close position later, unless it's expired worthless..???? I'm sure brokers are more than happy to have such client. :)
Remember even $0.10 in possible profit, doesn't make any sense..
NO sense at all, cause broker will take at least 50% of that.. If you have less than 0.20 in perspective
profits per contract, you should think twice, cause at the end of the day usually Broker will be the one, who's going to be laughing all the way to the Bank.
Skyzer,
With $100K in the balance, I was not concerned about commission. At Option House it is $8 + .15/c, or $38 bucks.
Thanks!!
rick
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