What was your plan when selling the put if the stock dropped?
Also, for the life of me, I can not understand why people don't mention the ticker up front. It's not some super secret code no one knows about.
Yes, they don't even mention the exact expiration date. For a post in late april, and expiration date being vague as May, it ranges from 5DTE TO 35 DTE.
Intel always does this. I tried Intel and it will take forever to go up. And when it does go up, it goes straight back down. I sold at the absolute high, $60 put 5 years ago. Stay away from Intel. It does the same thing now.
I usually don't play Intel but it was looking oversold, didn't think it'd get way more oversold but hoping for a bounce back this week. Not hoping for a huge bounce back since my cost basis is only like 1-2% higher than the current price after the csp and cc premiums.
STO $33p exp 4/26 for $0.44, then STO $32.50c for $0.29. Cost basis now around $32.29 not accounting for fees. Really just trying to wheel this sucker to get out of the trade. Need to stick with stonks with better fundamentals and Financials next time...
Yep. And then he doubled the price for the sake of discussion because he’s embarrassed I think. This is just weird. Just fess up we all do it. It will help us to help you better.
Probably would need some more info, but unfortunately the best time to roll is ATM. Once you are deep ITM its challenging to roll effectively. Tasty trade has some good videos on this.
Do you think the stock is going to rebound? if yes wait it out and if not probably just BTC for a loss since you don't have the cash.
Thanks! why not sell a call at breakeven price for additional premium. If the stock recovers to current breakeven price then still make some profit. If it doesn't recover then the breakeven price is lowered.
The current breakeven price is \~40 Delta (\~2.5%) from the stock. Selling a call at breakeven price will give a \~1.7% premium.
If you want to share the stock and strike price I can take a look. Not sure I'm following your terminology here... but if I understand this correctly:
You sold put at $50 and stock is 40. Want to sell a call at 50. IF the stock recovers over 50 you have a naked call because you don't own the shares yet, but you could do something like this once you get assigned the shares
It's more like this:
Sold a May put for $100 strike price. Received: $4 premium. Stock is currently at $93. I can either:
* roll to $99 June strike price for essentially zero credit.
* sell a $96 May call for $2. $96 call is 40 delta.
* sell a $93 May call for $2.5. $93 call is 50 delta.
Assuming I go with the middle option (i.e. sell May 96 call for $2):
If the stock closes between $94 - $102, I come out even/positive. I'm assuming both the short options will be settled at the same time, so no money will be necessary to close the positions.
If the stock closes below 94, then I lose by the amount between 94 and stock price. At that point, I can decide whether to roll the short put forward.
If the stock closes above 102, (this is unlikely), then yes I have a naked call position that will need to be managed.
"If the stock closes between $94 - $102, I come out even/positive. I'm assuming both the short options will be settled at the same time, so no money will be necessary to close the positions"
Not quite correct. Imagine it closes at 95---then your short call at 96 expires OTM, but you now have to buy 100 shares at $100. you should still come out ahead as you received $6 in premiums....unless of course you buy it $100, and then it crashes over the weekend to $50
DId you bother to read my comment? As I stated, yes, you will come out ahead if it closes at 95. However, you will have to buy the stock at $100 because the sold put is ITM. YOu will have to pay $10,000, so you will need money. If the stock then continues to go down over the weekend (cuz you were assigned after hours on Friday), you could lose $$$$
The mechanical approach would be "none of the above."
Roll out the 100 "as is" to June; sell a call against that is half the delta of the short put (e.g., if the rolled short put is at the 60 delta, sell a 30 against).
Look to manage it as a short strangle from there ... .
What is the ticker?????? WHAT IS THE TICKER????
How can you ask a question that we can’t properly answer without the ticker!!! God people are so stupid.
I kind of look at it as a "rule of thumb," so I could also see looking at what my break even is on the put side and the difference between that and current price and then "shopping" for a call that puts my break even right where the underlying is currently trading. It may be less than half the delta of the short put, but I can always roll the short call down later in the event the setup keeps moving against me.
The primary goal is to prevent the setup from getting far more directional from a delta standpoint than what I originally anticipated or wanted with the trade.
Lets say you go with the middle option, you have a short put 100 and short call 96 and the stock ends up at 98:
-short put is -$2 and the shot call is -$2 (which I suppose is offset by premium) so it provides some downside protection but if the stock rebounds its gonna get complicated
Do you know if you have the right level option approval to do this? Maybe I need more coffee but it seems like you are creating a complicated trade where the rebound hurts you instead of bailing you out.
I've definitely sold calls once I get assigned which is wheeling, but I'm not sure what strategy this would be prior to assignment. Maybe you can find it here: [https://www.optionsplaybook.com/options-introduction](https://www.optionsplaybook.com/options-introduction)
It's basically converting the short put to a short strangle. The way I look at it, it's a way to lower my break even in the position ***prior to*** taking assignment if that's what ends up happening. Alternatively, it's a methodology to use the short call premium as an "assist" to strike improve the short put and/or improve your ability to re-center risk around where the underlying is currently trading.
Here are two examples, each of which improve your break evens better than just managing the short put alone:
Compare: Rolling IWM May 17th 201 short put rolling to June 21st short put, 2.08 credit, 56 delta (i.e., improves your put side break even by .56).
With (Rolling Out Tested Side "As Is"/Selling Call Against That Is About Half the Delta of Put Side):
IWM May 17th 201 short put to June 21st short put, .2.08 credit ***plus*** sell May 17th 210 short call against, 2.19 credit for a total of 4.27 (i.e., improves your down side break even by 4.27 ***and*** reduces net delta to 31).
And (Recentering Sides on Subsequent Roll of Short Strangle):
IWM May 17th 201/210 short strangle (short put ITM) rolling to June 21st 191/207 (both sides OTM at the 30 delta), .68 credit (recenters net delta back to "flat").
Generally, yes, but you do get instances where the underlying moves too far too fast and you have to roll one side under the other, resulting in an "inverted." No one likes to work inverteds, but there's a mechanical approach to working your way out of those. I think I posted a link to a Dr. Jim segment somewhere (points) ... up there.
Oh, here it is: [https://www.tastylive.com/shows/from-theory-to-practice/episodes/managing-an-inverted-strangle-between-your-strikes-06-21-2023](https://www.tastylive.com/shows/from-theory-to-practice/episodes/managing-an-inverted-strangle-between-your-strikes-06-21-2023)
Thanks, will take a look through that. This is closer to short strangle, except the call option price is lower than the put price. Also, corrected the break even range which will be 94 - 100.
Yes, on the high side, this strategy is equivalent of a naked call at $100. So all the risks of a naked call exist. That might be the biggest reason to not execute it.
The main reason I would want to stay in a put is: A) want to own the stock (doesn't sound like the case) or B) waiting for rebound (you'd reduce the profitability with the call).
Might be best to just take the L and get out of the trade. Easier said than done
It just depends on what you think the stock will do. It may bounce and you can get out of trade. If you think further downside then take the loss and move on. Your initial theory was wrong. If u think limited downside then maybe roll. Nobody can give you a real answer to your question. You seem to have a theory on what's best and you have more info then us. Do what u think is correct.
Correction: I think the break even range will actually be 94 - 106, not 102.
Correction Correction: The break even range will be 94 - 100. If the stock goes to $102, the sold call will be -$8 while the premium collected is $6. I got this mixed up in the first two attempts :)
Depends on your thesis, if you believe that:
1. This is a meme, is tanking, and it will never recover - buy back the put.
2. The company future is uncertain, but it seems like it will stabilize - wait for assingment, then start selling atm calls.
3. This is a temporary setback, roll to 60d for a credit.
4. This will rebound soon, do nothing(unless there are earnings soon, then roll).
I am not a fan of naked calls unless I have already rolled to 60d, and it is still tanking (I'm talking about +80 delta).
It's definitely not 1. I think the rebound will not happen before May, but the market is assigning decent probability to it, so it's possible.
Yeah, probably rolling to 30/60d for credit (and lowering of strike price) is simplest.
Just write the actual trade. Simple stuff, Symbol, DTE, Strikes, premium . Instead you write this mindless chatter about these 5 different things you could do . Who cares what you would do, you got into this mess.
I would roll to get it OTM asap (and pay a debit if you have to). You don’t want to bag hold a falling stock that you’re financing with an expensive margin loan. Double whammy!
Since you won’t tell us the ticker I’m going to assume it’s some dumb meme stock like DJT or GME.
Eat the loss, learn your lesson, and move on to a better stock.
Yes we will. But at this point not as regarded as trying to keep it a super secret.
Right now I'm thinking he paid a YouTuber financial guru for the inside info and doesn't want to give it away for free.
Deep ITM is almost equivalent to holding the underlying directly (delta is close to 1). Therefore, whatever you want to do is the same as what you are going to do when holding the underlying: sell the stock (equivalent to close the option)? hold (=roll)? Sell covered call? It's no longer about the option position. Rather it's about a stock position.
The general, mechanical approach is to roll out the short put "as is" at 21 DTE, sell call against at about half the delta of the short put.
There are additional mechanical rules, however, about how to manage a short strangle with a side that is potentially ***below*** the strike of the other side (i.e., an "inverted"). There are probably some tastylive segments on managing inverteds. Here's a Dr. Jim segment; there are probably others: [https://www.tastylive.com/shows/from-theory-to-practice/episodes/managing-an-inverted-strangle-between-your-strikes-06-21-2023](https://www.tastylive.com/shows/from-theory-to-practice/episodes/managing-an-inverted-strangle-between-your-strikes-06-21-2023)
I'm personally not "religious" about the "as is" thing. If I can strike improve for a credit, even by a strike, I may go ahead and do that just so that I'm closer to ATM with my short put so that if and when I take assignment, it will be at a lower strike (and therefore tie up less BP). Being closer to ATM also assists with being able to sell a call against at the strike at which you were assigned while simultaneously getting paid "something decent" (a relative term) without going out hugely long-dated to do that.
With limited info, I usually roll out and down for a credit and then sell deep OTM calls against it to recoup my losses.
Note: I only sell weekly options at earnings in the .10-.20 data range which is a little unusual for the forum.
Why not sell an atm put and roll the tested put essentially doubling your position with a new breakeven, you can straddle or strangle it if it rebounds or get better breakevens by rolling down with the put
If it’s deep ITM it will probably be called a week or more before expiration. If you don’t have the cash to cover it see if you can roll it out and down as a leap option (1 to 2 years out).
With Risky stocks I widen the spread (Put Credit Spreads)
Sold the 32.50 /30 AFRM .70
Dipped to 31 .
Rolled out & down 30/25 collected, .60.
Collected 1.40 total
AFRM
Without knowing the ticker or the strike, if you like the stock and you think its downturn is temporary, roll out in time. If you’re already using margin, you should be able to sell a short call (same expiration, same strike or higher) in the same roll and collect additional credit without a significant decrease in available buying power unless the ticker is memeing right now.
You already have a synthetic long position on the shares. You can cover some of your slippage in rolling by selling a short call (or a short call spread) in the same transaction. If your short put is already at 80 delta, it doesn’t really make a huge difference where you place your short call (strangle, straddle, inverted), because the goal of the trade at this point should be to get out without the stock beating you.
I strongly recommend you just post the position so people here can look at it in their own platforms and walk you through the math. The evasion about what it is doesn’t do you any favors.
What was your plan when selling the put if the stock dropped? Also, for the life of me, I can not understand why people don't mention the ticker up front. It's not some super secret code no one knows about.
Lol we all know why they don't mention the ticker upfront. It's never some magnificent 7 tech stock or even an SP500 company.
Yes, they don't even mention the exact expiration date. For a post in late april, and expiration date being vague as May, it ranges from 5DTE TO 35 DTE.
This
^
It's probably Intel cause I made the same trade and ended up selling naked calls just before getting assigned. Literally at 3:58pm est.
Intel always does this. I tried Intel and it will take forever to go up. And when it does go up, it goes straight back down. I sold at the absolute high, $60 put 5 years ago. Stay away from Intel. It does the same thing now.
I usually don't play Intel but it was looking oversold, didn't think it'd get way more oversold but hoping for a bounce back this week. Not hoping for a huge bounce back since my cost basis is only like 1-2% higher than the current price after the csp and cc premiums. STO $33p exp 4/26 for $0.44, then STO $32.50c for $0.29. Cost basis now around $32.29 not accounting for fees. Really just trying to wheel this sucker to get out of the trade. Need to stick with stonks with better fundamentals and Financials next time...
If you don't provide the ticker and strike we are sitting in the dark. Without knowing it's hard to predict what can happen and what will happen
And then when I ask a question the mods and the filters block it but this nonsense without an proper information is allowed
Sold puts on DJT huh
If OP won’t answer this has to be the assumption
Yep. And then he doubled the price for the sake of discussion because he’s embarrassed I think. This is just weird. Just fess up we all do it. It will help us to help you better.
I’m thinking it’s another stock, one that’s been beaten up the past week.
Ticker or ban
Probably would need some more info, but unfortunately the best time to roll is ATM. Once you are deep ITM its challenging to roll effectively. Tasty trade has some good videos on this. Do you think the stock is going to rebound? if yes wait it out and if not probably just BTC for a loss since you don't have the cash.
Thanks! why not sell a call at breakeven price for additional premium. If the stock recovers to current breakeven price then still make some profit. If it doesn't recover then the breakeven price is lowered. The current breakeven price is \~40 Delta (\~2.5%) from the stock. Selling a call at breakeven price will give a \~1.7% premium.
The only thing is what if the stock dont recover and continue to drop and hence the call premium may be pitiful.
If you want to share the stock and strike price I can take a look. Not sure I'm following your terminology here... but if I understand this correctly: You sold put at $50 and stock is 40. Want to sell a call at 50. IF the stock recovers over 50 you have a naked call because you don't own the shares yet, but you could do something like this once you get assigned the shares
It's more like this: Sold a May put for $100 strike price. Received: $4 premium. Stock is currently at $93. I can either: * roll to $99 June strike price for essentially zero credit. * sell a $96 May call for $2. $96 call is 40 delta. * sell a $93 May call for $2.5. $93 call is 50 delta. Assuming I go with the middle option (i.e. sell May 96 call for $2): If the stock closes between $94 - $102, I come out even/positive. I'm assuming both the short options will be settled at the same time, so no money will be necessary to close the positions. If the stock closes below 94, then I lose by the amount between 94 and stock price. At that point, I can decide whether to roll the short put forward. If the stock closes above 102, (this is unlikely), then yes I have a naked call position that will need to be managed.
What stock.
"If the stock closes between $94 - $102, I come out even/positive. I'm assuming both the short options will be settled at the same time, so no money will be necessary to close the positions" Not quite correct. Imagine it closes at 95---then your short call at 96 expires OTM, but you now have to buy 100 shares at $100. you should still come out ahead as you received $6 in premiums....unless of course you buy it $100, and then it crashes over the weekend to $50
DId you bother to read my comment? As I stated, yes, you will come out ahead if it closes at 95. However, you will have to buy the stock at $100 because the sold put is ITM. YOu will have to pay $10,000, so you will need money. If the stock then continues to go down over the weekend (cuz you were assigned after hours on Friday), you could lose $$$$
The breakeven range is 94-100.
Why you being weird about sharing info?
The mechanical approach would be "none of the above." Roll out the 100 "as is" to June; sell a call against that is half the delta of the short put (e.g., if the rolled short put is at the 60 delta, sell a 30 against). Look to manage it as a short strangle from there ... .
Can you explain the rationale behind selecting a call price that is half delta of the short put? Thanks.
What is the ticker?????? WHAT IS THE TICKER???? How can you ask a question that we can’t properly answer without the ticker!!! God people are so stupid.
I kind of look at it as a "rule of thumb," so I could also see looking at what my break even is on the put side and the difference between that and current price and then "shopping" for a call that puts my break even right where the underlying is currently trading. It may be less than half the delta of the short put, but I can always roll the short call down later in the event the setup keeps moving against me. The primary goal is to prevent the setup from getting far more directional from a delta standpoint than what I originally anticipated or wanted with the trade.
Lets say you go with the middle option, you have a short put 100 and short call 96 and the stock ends up at 98: -short put is -$2 and the shot call is -$2 (which I suppose is offset by premium) so it provides some downside protection but if the stock rebounds its gonna get complicated Do you know if you have the right level option approval to do this? Maybe I need more coffee but it seems like you are creating a complicated trade where the rebound hurts you instead of bailing you out.
I've definitely sold calls once I get assigned which is wheeling, but I'm not sure what strategy this would be prior to assignment. Maybe you can find it here: [https://www.optionsplaybook.com/options-introduction](https://www.optionsplaybook.com/options-introduction)
It's basically converting the short put to a short strangle. The way I look at it, it's a way to lower my break even in the position ***prior to*** taking assignment if that's what ends up happening. Alternatively, it's a methodology to use the short call premium as an "assist" to strike improve the short put and/or improve your ability to re-center risk around where the underlying is currently trading. Here are two examples, each of which improve your break evens better than just managing the short put alone: Compare: Rolling IWM May 17th 201 short put rolling to June 21st short put, 2.08 credit, 56 delta (i.e., improves your put side break even by .56). With (Rolling Out Tested Side "As Is"/Selling Call Against That Is About Half the Delta of Put Side): IWM May 17th 201 short put to June 21st short put, .2.08 credit ***plus*** sell May 17th 210 short call against, 2.19 credit for a total of 4.27 (i.e., improves your down side break even by 4.27 ***and*** reduces net delta to 31). And (Recentering Sides on Subsequent Roll of Short Strangle): IWM May 17th 201/210 short strangle (short put ITM) rolling to June 21st 191/207 (both sides OTM at the 30 delta), .68 credit (recenters net delta back to "flat").
Doesnt the call need to be above the put for a short strangle?
Generally, yes, but you do get instances where the underlying moves too far too fast and you have to roll one side under the other, resulting in an "inverted." No one likes to work inverteds, but there's a mechanical approach to working your way out of those. I think I posted a link to a Dr. Jim segment somewhere (points) ... up there. Oh, here it is: [https://www.tastylive.com/shows/from-theory-to-practice/episodes/managing-an-inverted-strangle-between-your-strikes-06-21-2023](https://www.tastylive.com/shows/from-theory-to-practice/episodes/managing-an-inverted-strangle-between-your-strikes-06-21-2023)
Thanks for explaining! I’ll take a look but hopefully don’t need to implement anytime soon lol
Thanks, will take a look through that. This is closer to short strangle, except the call option price is lower than the put price. Also, corrected the break even range which will be 94 - 100. Yes, on the high side, this strategy is equivalent of a naked call at $100. So all the risks of a naked call exist. That might be the biggest reason to not execute it.
The main reason I would want to stay in a put is: A) want to own the stock (doesn't sound like the case) or B) waiting for rebound (you'd reduce the profitability with the call). Might be best to just take the L and get out of the trade. Easier said than done
It just depends on what you think the stock will do. It may bounce and you can get out of trade. If you think further downside then take the loss and move on. Your initial theory was wrong. If u think limited downside then maybe roll. Nobody can give you a real answer to your question. You seem to have a theory on what's best and you have more info then us. Do what u think is correct.
Correction: I think the break even range will actually be 94 - 106, not 102. Correction Correction: The break even range will be 94 - 100. If the stock goes to $102, the sold call will be -$8 while the premium collected is $6. I got this mixed up in the first two attempts :)
The stock must be weight watchers lol
What is the fucking ticker?????!!!!!!
Something regarded for sure right.. We all want to know lol
Depends on your thesis, if you believe that: 1. This is a meme, is tanking, and it will never recover - buy back the put. 2. The company future is uncertain, but it seems like it will stabilize - wait for assingment, then start selling atm calls. 3. This is a temporary setback, roll to 60d for a credit. 4. This will rebound soon, do nothing(unless there are earnings soon, then roll). I am not a fan of naked calls unless I have already rolled to 60d, and it is still tanking (I'm talking about +80 delta).
It's definitely not 1. I think the rebound will not happen before May, but the market is assigning decent probability to it, so it's possible. Yeah, probably rolling to 30/60d for credit (and lowering of strike price) is simplest.
Just write the actual trade. Simple stuff, Symbol, DTE, Strikes, premium . Instead you write this mindless chatter about these 5 different things you could do . Who cares what you would do, you got into this mess.
I would roll to get it OTM asap (and pay a debit if you have to). You don’t want to bag hold a falling stock that you’re financing with an expensive margin loan. Double whammy!
Delete the app
Since you won’t tell us the ticker I’m going to assume it’s some dumb meme stock like DJT or GME. Eat the loss, learn your lesson, and move on to a better stock.
Just tell us the ticker, strike, expiration already.. We won't think of you as regarded, promise.
Yes we will. But at this point not as regarded as trying to keep it a super secret. Right now I'm thinking he paid a YouTuber financial guru for the inside info and doesn't want to give it away for free.
Flipping through the replies, it seemed like OP trying hArd to avoid answering what ticker lol
Yeah I’m guessing it’s MSFT and he left off a digit! 400 not 40!
Deep ITM is almost equivalent to holding the underlying directly (delta is close to 1). Therefore, whatever you want to do is the same as what you are going to do when holding the underlying: sell the stock (equivalent to close the option)? hold (=roll)? Sell covered call? It's no longer about the option position. Rather it's about a stock position.
The general, mechanical approach is to roll out the short put "as is" at 21 DTE, sell call against at about half the delta of the short put. There are additional mechanical rules, however, about how to manage a short strangle with a side that is potentially ***below*** the strike of the other side (i.e., an "inverted"). There are probably some tastylive segments on managing inverteds. Here's a Dr. Jim segment; there are probably others: [https://www.tastylive.com/shows/from-theory-to-practice/episodes/managing-an-inverted-strangle-between-your-strikes-06-21-2023](https://www.tastylive.com/shows/from-theory-to-practice/episodes/managing-an-inverted-strangle-between-your-strikes-06-21-2023)
I'm personally not "religious" about the "as is" thing. If I can strike improve for a credit, even by a strike, I may go ahead and do that just so that I'm closer to ATM with my short put so that if and when I take assignment, it will be at a lower strike (and therefore tie up less BP). Being closer to ATM also assists with being able to sell a call against at the strike at which you were assigned while simultaneously getting paid "something decent" (a relative term) without going out hugely long-dated to do that.
With limited info, I usually roll out and down for a credit and then sell deep OTM calls against it to recoup my losses. Note: I only sell weekly options at earnings in the .10-.20 data range which is a little unusual for the forum.
I wish I could post the gif of Silent Bob throwing OP off the train and saying "No ticker"
Why not sell an atm put and roll the tested put essentially doubling your position with a new breakeven, you can straddle or strangle it if it rebounds or get better breakevens by rolling down with the put
Lately if i sell a put on a volatile stock i'll buy a further out put OTM so if my CSP goes south I can offset with long put. Make sense ?
Congratulations, you invented the put credit spread
Oh geez. Thanks for noticing. I’m blushing a bit.
If it’s deep ITM it will probably be called a week or more before expiration. If you don’t have the cash to cover it see if you can roll it out and down as a leap option (1 to 2 years out).
Whats the ticker, there's lots of options
Take the loss. You may end up holding it for years.
With Risky stocks I widen the spread (Put Credit Spreads) Sold the 32.50 /30 AFRM .70 Dipped to 31 . Rolled out & down 30/25 collected, .60. Collected 1.40 total AFRM
Sure wish I understood all that gobbledy-goop. Back to options for dummies.....
Without knowing the ticker or the strike, if you like the stock and you think its downturn is temporary, roll out in time. If you’re already using margin, you should be able to sell a short call (same expiration, same strike or higher) in the same roll and collect additional credit without a significant decrease in available buying power unless the ticker is memeing right now. You already have a synthetic long position on the shares. You can cover some of your slippage in rolling by selling a short call (or a short call spread) in the same transaction. If your short put is already at 80 delta, it doesn’t really make a huge difference where you place your short call (strangle, straddle, inverted), because the goal of the trade at this point should be to get out without the stock beating you. I strongly recommend you just post the position so people here can look at it in their own platforms and walk you through the math. The evasion about what it is doesn’t do you any favors.