Let's Get Dangerous with Options

LONG CALLS

The owner of the call option has the RIGHT to exercise the option at the strike price.
and
the seller of the call option the OBLIGATION to deliver the stock at the strike price

As you can see from the probabilities long calls are pretty okay. but not better than a coin flip. You have to use your psychic and technical analysis wizardry to determine direction.

I only use standard deviation lines for my bets, even then I only make this bet when out of margin and for short term stuff.

The way out of the money long call was what won me the most ROC I've ever had.

but it was a moon shot. I'll take them my overall strategy is to generally leave these on if I leg out of trades and they happen to pass through earnings or if they cost more to sell in fees than I'll get back.

The ATM long call - just outside the money is one of the most premium heavy options with the lowest pops b/c of that heavy premium.
There is no intrinsic value in the above out of the money options it is all what amounts to an insurance premium. b/c the Strike is above the current market price.

The Just in the money call is the most premium heavy "stock replacement" call. Why stock Replacement? b/c it has intrinsic value; its strike is below the current stock price.
Its value is composed of Large Premium and Small intrinsic value

The Deep in the money call is a light premium call like the Way out of the money call. However, Premiums are a little higher for these than the call premium on the other side of the Mark. These Function very similar to stock and price movements correllate in the 90's generally. It is heavy in intrinsic value and light in premium.

At expiration, Out of the money calls fall to 0 and In the money calls fall to Intrinsic Value. Mark minus Strike.

If you "know" a stock is going to go up and stay up, the safest bet is a deep ITM call.
If you Know its going to RIP than buy some atm or way outs if you have a target.
Just ITM is 4 aquisition

>you know no one on this board knows a thing about options
Vanguard told me I didn't have enough money to trade options, though they did give me authority to do covered calls and covered puts.

I think it really is because I didn't read Options as a Strategic Investment.
>shit is longer than a Stephen King novel

I'm down 722

about 150 of that is Vix hedge and rolling

and the rest is the DJX super Bear with its short strike at 165.

Beyond that its been nuetral

I'm building positions in SDRL which I've made back 80% of my money.

I had weak hands with X and pulled the buy high sell low meme.

So my Strategy has changed from generally neutral Iron condors in the beginning to more directional hedged bets on underlyings I believe are at price extreme.
I'm a better bear than I am bull though so far.

what site

Dough.com

If you go through Dough, you get 1.5$per contract and at 2.5k$ you can get margin account. Then you can trade to your hearts content.

Sign up on thinkorswim.com and get 2 months of papermoney and start learning.

Thanks, but I think I'm going to stick with index funds and Dow components/safe stocks for now.

>I'm building positions in SDRL
You are crazy. I picked the safe route in Exxon.

Oil stocks:
God tier
>Exxon Chevron
Mid tier
>BP
Crazy tier
>Seadrill

Not crazy exxon is a little to rich for my blood.
Two they have nearly a brand new fleet and can likely refi for 3 credit cycles. If oils not back by then well sheeeeiiit.
In the meantime

I didn't quite get to implied volatility or puts or selling options yet but with SDRL I sell atm puts for above 10% of the price. if it falls below I get it for cheap. If it stays or climbs I get to pocket the cash, regretting that I didn't sell more "insurance"

I'll do short calls tomorrow.

i was looking at PSA and thinking of buying a put at 250 strike and selling a call at 260 strike, though, im not sure how to contain the upside risk while still being able to profit in the 250-265 range

theres just too much shit i can do. i always feel like there's some better way to do what im trying to do

Always bet on black.

>passenger 57 quote
>blade movie
Fucking hell, Jerome.

>Not crazy exxon is a little to rich for my blood.
Are you referring to the cost per share? If so then you are making a beginners fundamental investing mistake in thinking that the price per share is linked with value. A low share price does not mean that a stock will go up more. On the contrary a stock that has hit a 52 week high is more likely to go up more than one that has hit a 52 week low.

Second biggest investing mistake is relying on the 52wk low in making investing decisions.

price is more likely to make a new high from a recent high than to make a new low from a recent high, and price is more likely to make a new low from a recent low than to make a new high from a recent low.

You think stocks are safer than options? I'd rather take a 90% chance of success than 53%, thank you very much.

If you trade options, big stocks usually require you to lock up more margin to hold that position e.g it costs more to sell naked calls in SPY than in X.

For stocks, what you said is mostly right.

You're misunderstanding the fundamental money making mechanic of options trading. Volatility or priced in fear premium.

With options trading the underlying does not matter after certain liquidity thresholds are reached. a 70% bet is a 70% bet.

You're not wrong about trends and general direction but with trading Volatility direction rarely matters to us.
Second Time is on our side, The more time runs by the more we collect similar to dividends.

I think the best way to do what you're trying to do is a ratio spread.
say the put is .50 you'd sell 2 .25 call credit spreads to buy the put, thus limiting both sides.

why not sell stuff in XOP, XLE or USO? Selling strangles in /CL can be good too if you have the capital and permission.

PSA got #rekt today
options already up 500

Dipshit chinese shill. You don't even make money. Kindly fuck off.

much better but I lack these powers

soon.jpg

or, oh idunno, YOU can sell them
>it would cost more in fees
>not trading with interactive brokers

SHORT CALLS

The owner of the call option has the RIGHT to exercise the option at the strike price.
and
the seller of the call option the OBLIGATION to deliver the stock at the strike price

Guess what You're the seller now. Or the Writer of the option Contract.

As Sellers we get paid when the option price is Out of the money. Or the strike is not breached.

As said the option market is a scam. Yup and you can scam away on the Sell side. Notice the probabilities on the Sell Side. Better than 50%.
Why? How?
Because the premiums you paid when you bought are now being paid to you the seller. Up front, in Advance. For your Guarantee.
That ladies is your EDGE.

When Long options you lose what you paid for the options if they expire worthless.
When you sell you're exposed to what is theoretically Infinite risk, for cash up front.

Rips and Meltups are your nightmare fuel when Short Calls. In reality though there are upper limits on these risks as no stock has gone to infinity yet. These plays are particularly right now near market tops. Every day you hear New market high. Sell A few call options. It has to make a Higher High for you to lose.

Typically you're not Gonna deal too much with WAY out or DEEP in the money Short Calls because there is very little premium to be had ergo very little buffer room for you.

The Rule for being short options is to have strong hands and a cool head. We don't chase Prices we let prices fall to our profit point.
The rule is if your position becomes at risk you Roll Out in time before you roll up the strikes to reduce your risk.
Why?
They give you more cash to do it. Nothing is more secure than more cash.
Remember you don't have to pay the losses up front, you can wait For the market to come back to you and collect premium the whole while and wait for the probabilities to play out.
Often you'll want to cash out at 25-50% of max profit with these. The Probablity of hitting 50% profit in short options are in the 90s

finally an options thread
fucked up last week and bought some AMZN 705 calls on thursday and sold them an hour later made about 70 each contract then AMZN jumped to 720 before close
plz tell me im still gonna make it biz :'(

teach me your ways senpai master trader OP
last july i made 2k off 500 then lost the whole 2500 to some apple calls. i now buy straddles or strangles instead of holding single positions
this is me

First off never post amphibians again. The quote about thoughts become words become actions.

Second less important point is that that was a FREE leftover position from an earlier, Iron Condor. I made probabaly like $80 off the condor and had this shitty little $.01 call left over.

The over arching strategy here is to cash flow little bits at a time and let the odds play out in your favor. If a cashflowing position happens to be in the way of a nice explosive catalyst sure.
As far as directional trades I just keep 1 and 2 Std Devation lines on the charts and if its liquid and I have the funds and It Breaches one of these lines I'll paint the tops and bottoms with verticals assuming no major catalysts are coming.

Third why aren't you writing options?
Get on Dough complete the tutorial and submit the form. You'll get at least 2nd level permissions.

i am level 2 for etrade cant write naked calls or puts but i also feel like they would be too risky

Just checked etrade, you need level 3 at least.
any risk is ameliorated by improved probabilities. The more you trade the more you give these opportunities to play out

>never post amphibians again

I cant even trade options, When I opened my account they said I had zero trading experience so they didnt give them to me. I can always try and get them later on after I learn wtf they are lol.

>First off never post amphibians again.

fucking roasted

Get on Dough complete the tutorial and submit the form. You'll get at least 2nd level permissions.

>Iron condors
>>/kungfu/

he is chinese after all....

Holy shit is this a legit way to make a long-term income?

I'm not even to the good parts yet user.

Please continue

It looks pretty interesting and you just got me into options. Though I have to admit I'm still trying to figure out what you're describing I believe that I'm getting there.

I'm pretty sure it is. What do you think stock traders do all day?

All it comes down to is managing your finances yourself. Think of virtually every business out there, you buy things and then sell them on for a profit. Or you sell services. Take a second hand car salesman for example. You buy a car, do it up, and then sell it on for a profit. There's an endless list of analogies you can use but at the end of the day they all go on the same basic principals. The beauty of the stock market though is that there's none of the baggage and logistics that go with it. It's a beautiful virtual market place where you can buy and sell shit all day long.

You just need to spend some time learning the domain and developing your awareness of the market. Learning how to use all the tools in the shed like options, futures, turbos, warrants etc, to help you manage your risk and allow you to use complex strategies beyond just buying long stock and hoping it goes up.

I'm still in the learning phase myself right now but it just dawned on me 8 months ago while I was looking around for things to buy and sell. I'm pretty excited reading the stuff here too. I plan on learning this stuff well and being able to carry this on forever and into retirement. You don't need an office, a staff or any other shit, just a computer and an internet connection, and you're set. Make your money work for you, it's really powerful stuff.

>90% chance to make a 50% gain

so you're a millionaire then

I didn't say that. You read it wrong. 90% chance to reach 50% max profit.
In writing options you take undefined risk for defined cash. If you sell the instrument for 50% of the cash due. Odds are in the high 90s you'll be profitable.

>As far as directional trades I just keep 1 and 2 Std Devation lines on the charts and if its liquid and I have the funds and It Breaches one of these lines I'll paint the tops and bottoms with verticals assuming no major catalysts are coming.

Spot trader here, been doing this shit for months before realizing that Stdevs mean nothing (price distribution is not normal).

it's only slightly skewed so you take into account implied volatility

Is hydroponics profitable or scam.
Give me numbers

Price fluctuations aren't normal distributions

They're not I believe log-normal
Negative skew positive kurtosis

i mean you can literally look at the distribution and change a few parameters slightly and you're set
honestly i think it's like a total skew of like .25% or something

stats.stackexchange.com/questions/125761/why-stock-prices-are-lognormal-but-stock-returns-are-normal

some nice insight