What Did You Buy Today?

[john]

Fenders I sent you a PM

[divmenow]

(04-03-2020, 03:25 PM)fenders53 Wrote:

(03-30-2020, 06:02 PM)DividendGarden Wrote:

(03-30-2020, 05:36 PM)fenders53 Wrote:

(03-30-2020, 03:01 PM)DividendGarden Wrote: Bought a SPY put right before the close, seconds ago.  $262 strike price.  I just don't see how the markets can keep rising.

Probably a good move.  I would be pleased if my puts expire worthless because it would likely mean my port is doing well.  It is hard to imagine we don't have some big down days soon though.

Yeah, I've got two and a half weeks until the 17th when it expires.

(04-03-2020, 02:39 PM)stockguru Wrote: Question about PUTS

Was thinking of buying PUTS in XOM. $37 strike price

I never bought options in my life lol. How does this worK?

I would like to buy XOM at $37. So looks like the 5/1 is going for $6.00

So my cost would be 100 x $6.00 = $600 correct?

And if the stock were to trade below $37 I would be in the money?  If it goes under $37 before the expiration can I still sell for a profit?

What is a buy open, or sell open??

How do I profit from puts ??

Sorry I'm a rookie lol

(04-03-2020, 03:13 PM)divmenow Wrote:

(04-03-2020, 03:06 PM)fenders53 Wrote:

(03-30-2020, 06:02 PM)DividendGarden Wrote:

(03-30-2020, 05:36 PM)fenders53 Wrote: Probably a good move.  I would be pleased if my puts expire worthless because it would likely mean my port is doing well.  It is hard to imagine we don't have some big down days soon though.

Yeah, I've got two and a half weeks until the 17th when it expires.

(04-03-2020, 02:39 PM)stockguru Wrote: Question about PUTS

Was thinking of buying PUTS in XOM. $37 strike price

I never bought options in my life lol. How does this worK?

I would like to buy XOM at $37. So looks like the 5/1 is going for $6.00

So my cost would be 100 x $6.00 = $600 correct?

And if the stock were to trade below $37 I would be in the money?  If it goes under $37 before the expiration can I still sell for a profit?

What is a buy open, or sell open??

How do I profit from puts ??

Sorry I'm a rookie lol

I will send you a PM. Basic options are not rocket science but market volatility adds to the complexity now.  I am not an options genius but I have traded well over 500 since I joined this forum and I am not broke yet lol.

I recommend not doing options. If you don't understand it, stay away lol

But if you want to go that route buy PII and then write a  protect put as it goes down to $25 

Do you trade options?

I do yes but only like 2-4  times a month. Lately a bit more with a recession near. 

So how about Buffet selling DAL and LUV. The news just hit. He took some big losses there. What happened to he was long term lol. He has all the cash on hand why not just buy more at these levels? He must see them going down to single digits 

[NilesMike]

(04-03-2020, 03:01 PM)Otter Wrote: Those are pretty risky put options (weeklies). Given the short expiry, you could get absolutely destroyed by IV-crush and theta (time decay destroying the value of an option) if the price of oil and XOM continues to moon in the short-term. 

In the most general terms, you can typically make money re-selling a put option contract if the share price has declined below the point it was at when you purchased the contract. HOWEVER, this is where IV-crush and theta can wreck your plans. Imagine a scenario where you buy 5/1/20 XOM 35 Puts today, while XOM is at 37. If XOM suddenly plunges down to 36.50 tomorrow, you should be able to re-sell the option for a decent profit. Alternatively, there could be a scenario where XOM goes up to 40 in the next few weeks, then slowly declines to 34.90 by April 29, with a market expectation in the options market that it will be jumping back up in price soon (implied volatility, where the IV in IV-crush comes from). In that scenario, even though you are under the strike, your option is not profitable. After taking into account the premium you paid for the option, the two days remaining to expiry, market expectation of XOM rebounding (implied volatility), your option is worth less than you paid for it. There are a nearly limitless number of potential scenarios, and a large number of them result in those weeklies becoming worthless in a hurry.

Otter has given a good example of what may happen.
Let me boil it down into even simpler terms.

To successfully trade options you have to good at direction. Volatility direction and stock price direction. If you are right on one you might make money. If you're wrong on both, you're toast. Your focus should be on volatility direction.

Generally speaking, stock goes up, its volatility goes down (outside of earnings events) and vice versa.

Now if you're bullish on a stock in this high vol environment, what is the play? Sell a put or put spread. At high vol, it is likely to fall and any upward stock movement will accelerate the process. Puts are also usually higher priced than calls.

If you're bearish and wish to benefit from a volatility expansion and stock price drop, an out of the money (OTM) put debit spread is the play of the day or a calendar spread.

Get to where it is simple in your mind. Their is only credit/credit spreads and debit/debit spreads using puts or calls. Check the environment you are in and apply the trades accordingly.
Nobody know what is going to happen. Watch your size and let the strategies work.

Good luck

[fenders53]

Guru,

Nobody here will recommend you trade an option without a reasonable understanding. I learned from boooks many year ago. You don't learn until you risk like a $100 and watch the value move for a few weeks. There are countless option basic vids on youtube. You will probably grasp the basics if you spend a few hours. Here is a very basic intro. Watch a few more from other providers. https://www.youtube.com/watch?v=GRUspTL0Kiw

Options are based on complicated statistics, but you don't have to have a PHD to trade them in moderation. You do need to understand potential loss or gain. Options are just leverage. You can use them to gamble, you can use them as insurance. (hedge your long portfolio).

I very seldom buy options but I have lately as a hedge. I have executed perhaps 700 options the past 18 months. I was the seller 690 times so you know where I stand. I play options very conservatively and have a very high "win rate". Easily 75%+. I hit a lot of singles and very few home runs. I sell options to folks trying to hit homeruns and occasionally they do. If you decide to invest some time, you'll have to understand the most basic definitions of...

Calls
Puts
Strike Price
Expiration Date
Time value decay and intrinsic value

If you are willing to invest a few hours educating yourself first, step two would probably be to let us help you pick a fairly volatile stock that is oversold, and YOU believe very likely due for a decent upside bounce in the near future, and throw down $100. Nothing like watching real-time gains and losses to understand how options move hour to hour. Some recent examples that seemed obvious to me. WEN under $10, O at $40, most major oil stocks. Maybe even Polaris if it gets hit some more next week, or even something more conservative like T. A stock that seems to have some amount of downside support is usually better.

Pick something I halfway agree with and I will mirror the trade and we'll win or lose together. I'll try to explain what is going on day by day. I'm pretty sure a few others here with options experience will help you learn. In the end you may get lucky, or learn why I strongly prefer to sell options rather than buy them in almost all market conditions. Don't play with index options yet. That's a bad lesson #1. They are expensive and we could be wrong. I'd rather see you drop $100 and try to turn it into $300 on a very basic option you understand. Just go in thinking it's just "tuition". You're smart and I know you won't get reckless because we will lecture you if you even try lol. I learned the hard way when I was a kid.

This conversation is more appropriate for the conservative options thread. If you want to learn you will get help there.

[DividendGarden]

(04-03-2020, 02:39 PM)stockguru Wrote: Question about PUTS

Was thinking of buying PUTS in XOM. $37 strike price

I never bought options in my life lol. How does this worK?

I would like to buy XOM at $37. So looks like the 5/1 is going for $6.00

So my cost would be 100 x $6.00 = $600 correct?

And if the stock were to trade below $37 I would be in the money?  If it goes under $37 before the expiration can I still sell for a profit?

What is a buy open, or sell open??

How do I profit from puts ??

Sorry I'm a rookie lol

You definitely will want to learn more about them and "paper trade" them before putting actual money at risk.  I use options very sparingly, maybe 2x per year.

[fenders53]

(04-04-2020, 11:46 AM)DividendGarden Wrote:

(04-03-2020, 02:39 PM)stockguru Wrote: Question about PUTS

Was thinking of buying PUTS in XOM. $37 strike price

I never bought options in my life lol. How does this worK?

I would like to buy XOM at $37. So looks like the 5/1 is going for $6.00

So my cost would be 100 x $6.00 = $600 correct?

And if the stock were to trade below $37 I would be in the money?  If it goes under $37 before the expiration can I still sell for a profit?

What is a buy open, or sell open??

How do I profit from puts ??

Sorry I'm a rookie lol

You definitely will want to learn more about them and "paper trade" them before putting actual money at risk.  I use options very sparingly, maybe 2x per year.

I agree with that with only one caveat.  Unlike paper trades, there are spreads involved with options and you have to experience what order price you may actually be able to execute.  A volume of trades is how you will learn.  If you place a $100 bet and find yourself up 50% up the next day, maybe ring the register and move on.  The reality is you have to get your nose bloodied a couple times to understand the risk reward.  Very few have the stomach to not panic and close out when a trade goes against them for a half a day.  You gotta know your personal risk tolerance.  Options definitely aren't for everyone, but they treat me very well as long as I don't use them for gambling purposes very often.  It doesn't always work out but I steal the gamblers lunch money over time.  After 700 trades I'm confident enough it's true.  I'd be broke in a hurry if I was wrong about that.

[fenders53]

And the futures are up on all the great news.... Stand by for another volatile week IMO.

[NilesMike]

(04-05-2020, 08:08 PM)fenders53 Wrote: And the futures are up on all the great news.... Stand by for another volatile week IMO.

LOL, I'm still holding my ES short from 2500. I hope to get paid this week, I know i've taken my share of heat on this trade.

[fenders53]

(04-05-2020, 09:07 PM)NilesMike Wrote:

(04-05-2020, 08:08 PM)fenders53 Wrote: And the futures are up on all the great news....  Stand by for another volatile week IMO.

LOL, I'm still holding my ES short from 2500. I hope to get paid this week, I know i've taken my share of heat on this trade.

I have some shorts because it makes me feel better, but I am definitely net long.  I won't be celebrating if the market gets crushed too much.

[NilesMike]

Retest 2400 would be good enough for me!

[fenders53]

(04-05-2020, 10:14 PM)NilesMike Wrote: Retest 2400 would be good enough for me!

I could live with that, and I think most here got a good enough scare to have a little dry powder ready.  What I don't want is some 1500 action.  That's the stuff that will scare small investors away for years or longer.  Hard to prepare for retirement if you're scared to own stocks past age 50.  This has to be very frightening for folks that don't understand the markets.  I have some empathy for them as I have relatives that got crushed during the GFC when they were due to retire.

[crimsonghost747]

Well, guess the world is saved and the pandemic is over again!
Bought some REE from Madrid this morning again. They didn't rocket like the rest, so it's the only one I managed to grab from my buy list today.