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I also just checked out the Call option chain on SVXY. 1/21/22 near-the-money 40 Calls (expiring in 682 days) have an ask of $11.30. I anticipate this market will have a couple more volatility spikes and big legs down, driven by headlines such as hospitals running out of beds. Long-dated NTM SVXY calls could get substantially cheaper. Assuming you are able to buy within a fair approximation of the bottom (BIG IF), those would likely print money during any sustained run-up in the years following.
Maybe we should change the title of this thread to Risky Options Bets. LOL.
In all seriousness, this is why any pool of funds allocated to options will remain at levels that I am willing to risk going to 0%.
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Thanks for your input Otter. We definitely agree there will be no V bottom this time. I am deeply disappointed we just wasted most of our spare bullets shooting them into the sky like some cheap loan rates would somehow make virus fear go away. (Not just fear). But whats done is done, and the environment will be good for a rapid recovery. This isn't 2008 at all IMO. There will come a time when the market runs violently higher in a matter of a week. I need to be there for that. I'll have to do this when the masses are still a little scared. Waiting for blue skies will be too late like always. You miss half the ride up when you wait for it to be obviously safe. It's never risk free.
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(03-10-2020, 11:17 AM)fenders53 Wrote: Thanks for your input Otter. We definitely agree there will be no V bottom this time. I am deeply disappointed we just wasted most of our spare bullets shooting them into the sky like some cheap loan rates would somehow make virus fear go away. (Not just fear). But whats done is done, and the environment will be good for a rapid recovery. This isn't 2008 at all IMO. There will come a time when the market runs violently higher in a matter of a week. I need to be there for that. I'll have to do this when the masses are still a little scared. Waiting for blue skies will be too late like always. You miss half the ride up when you wait for it to be obviously safe. It's never risk free.
As to option pricing, this I absolutely agree with. The time to buy calls or go short volatility will be the point of maximum pessimism and capitulation.
I am going to do my best to identify that time and allocate some funds in accordance with that thesis, but am aware that prospects of success in that area are extremely low (hence limiting the amount of funds used). My primary objective will be stocking up on underlying shares of blue chips that I have wanted to own/add to for years, but didn't due to valuation concerns.
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03-10-2020, 11:31 AM
(This post was last modified: 03-10-2020, 11:32 AM by fenders53.)
(03-10-2020, 11:16 AM)Otter Wrote: I also just checked out the Call option chain on SVXY. 1/21/22 near-the-money 40 Calls (expiring in 682 days) have an ask of $11.30. I anticipate this market will have a couple more volatility spikes and big legs down, driven by headlines such as hospitals running out of beds. Long-dated NTM SVXY calls could get substantially cheaper. Assuming you are able to buy within a fair approximation of the bottom (BIG IF), those would likely print money during any sustained run-up in the years following.
Maybe we should change the title of this thread to Risky Options Bets. LOL.
In all seriousness, this is why any pool of funds allocated to options will remain at levels that I am willing to risk going to 0%.
LOL, it has become the Risky Option thread. I think we should be free to discuss all our ideas, but always disclose the risk factor of our actions. We didn't get where we are being reckless. Maybe I am being a little too idealist but the intent on the net commentary is to cause no harm to others. That matters a lot to me. I sure wish others felt the same as I have been led astray plenty by others over the years. Recent S.A. articles annoy me. It's probably the most popular stock forum on the net, and the high number of bullish articles on obviously troubled sectors is outrageous. They are in denial and getting people financially killed right now.
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Fenders if you're going to buy call LEAPS, sell a nearer month call above the market. Both will have the same impact from whatever the volatility is and the nearer month will decay faster.
(Buy your LEAP with a 70 Delta or greater, several strikes ITM)
Synthetic covered call is the strategy
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03-11-2020, 08:38 AM
(This post was last modified: 03-11-2020, 08:39 AM by fenders53.)
(03-10-2020, 09:59 PM)NilesMike Wrote: Fenders if you're going to buy call LEAPS, sell a nearer month call above the market. Both will have the same impact from whatever the volatility is and the nearer month will decay faster.
(Buy your LEAP with a 70 Delta or greater, several strikes ITM)
Synthetic covered call is the strategy
I am definitely going to run my selections past you Mike. You have a much deeper understand of the Greeks. I definitely plan to over think this lol. I will NOT be happy if I lose it all and add to my beat down I took the past month. This whole idea is VERY much contrary to my conservative approach to options. There is a good reason my normal option strategy wins at such a high percentage. I don't need to hit five home runs here, but I'm not looking for 2% monthly return either. I will sleep best if I mitigate the risk some.
-I don't plan to wake up some Monday morning feeling lucky and buy all positions at once. I will surely miss the timing some so staggering/laddering most anything I ever do in investing usually ends up the better course. Unless I get lucky, I will leave the positions the same way as I'll be wrong on the exact timing that day too.
-I will diversify into several sectors. FB and PG aren't likely to move the same week/month.
-No commodities! I don't want to be left hoping the market, a presidential election and Saudi all cooperate at once. I might as well bet on the weather next Christmas lol.
But first I need to wait for Otter to be quarantined on a cruise ship with a case of the the Carony during a hurricane so we can get closer to max pessimism lol.
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Sold my two Mar 19 21 TSLA 300 Puts this morning for a 74.6% gain. Not playing around with a cult stock again.
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(03-11-2020, 08:48 AM)Otter Wrote: Sold my two Mar 19 21 TSLA 300 Puts this morning for a 74.6% gain. Not playing around with a cult stock again.
I was hoping the volatility might spike the IV enough to save you, I made a few bucks shorting TSLA about five years ago and quickly figured out I was playing with fire for no good reason. You have to have some skin in the game just once to truly understand daring a cult stock is a really dangerous idea. 
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Hi Fenders,
How do you decide if the market is right to sell options? This morning I sold a put option, 12.00 strike for .57 for 3/20 expiration on WEN
I am not great at technical analysis it just seemed like a good deal wether I get assigned or not.
Although my OZK put @ 22.5 and my GEO put @16.00 from a month ago for 3/20 expiration seemed like good deals at the time also lol
Oh well il just sell covered calls against them next week.
Thanks, John
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(03-16-2020, 12:36 PM)john Wrote: Hi Fenders,
How do you decide if the market is right to sell options? This morning I sold a put option, 12.00 strike for .57 for 3/20 expiration on WEN
I am not great at technical analysis it just seemed like a good deal wether I get assigned or not.
Although my OZK put @ 22.5 and my GEO put @16.00 from a month ago for 3/20 expiration seemed like good deals at the time also lol
Oh well il just sell covered calls against them next week.
Thanks, John
My rules are somewhat fluid but I have to be truly OK with owning the stock for years in case that is how it ends. Don't get sucked into a high premium just for the sake of the premium. You'll get burned soon enough if you do it often. When the market drops like now, you'll end up getting assigned some shares at much higher prices than you desire. In a normal market, I sell puts when the stock is in the bottom third of it's trading range or preferably oversold a bit. That almost always works out. I no longer sell covered calls on quality stocks if I get assigned and they are still oversold. You end up trading nickels for dollars WAY too often by committing to lock in a loss if you get exercised. If you are OK with the loss, you sold a put on the wrong stock and were just chasing premiums. You assumed the risk, but don't get the reward when they rebound. Wait for a better time to sell the covered calls.
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Anyone for an AAPL put spread in the 1580 or 1600 area?
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(03-17-2020, 06:37 AM)NilesMike Wrote: Anyone for an AAPL put spread in the 1580 or 1600 area?
No, I am exhausted from trying to determine which of my 45 stocks is going bankrupt next month so I can average down on the good ones about every two hours lol. I'll correct this problem in the future.
But what you got in mind? I've always got time to check out your latest option idea Mike.
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