Conservative option strategies, what did you buy or sell today?

[john]

Thanks Fender, this is my 1st covered call sell. Fairly new to options..
Have a question on Call options, OZK 5/15 22.50 strike, bid is .30 ask is .60 Last trade is 1.69
Why is the last trade higher then the ask?
Thanks, John

[fenders53]

(03-23-2020, 11:21 AM)john Wrote: Thanks Fender, this is my 1st covered call sell. Fairly new to options..
Have a question on Call options, OZK 5/15  22.50 strike, bid is .30 ask is .60 Last trade is 1.69
Why is the last trade higher then the ask?
Thanks, John

That last trade may have happened last week on thinly traded options.  If you are selling enter a trade near the ask, then walk it down.  When you get to the price you think you need, don't be afraid to walk away and let the order sit there.   We never know what market makers are up to.  They play games.  Sometimes they will jump up and grab your order if you are a little patient.


Try to stay near-term on these options or you are going to learn a hard lesson.  No chance in hell I am selling a call mid May when the market is down this hard.  Things change fast from a multi-year market high or low.

[Otter]

Not sure if this counts as conservative or not, but compared to my recent options forays, it feels like it.

Bought 400 shares of SLV @ 13.23, Sold covered 5/1/20 13.50 Calls against it for a quick 6% premium.

Silver may continue a downturn in the near term as an industrial metal, but I'm thinking the endless money printing eventually brings it up from decadal lows.

[fenders53]

(03-30-2020, 10:03 AM)Otter Wrote: Not sure if this counts as conservative or not, but compared to my recent options forays, it feels like it.

Bought 400 shares of SLV @ 13.23, Sold covered 5/1/20 13.50 Calls against it for a quick 6% premium.

Silver may continue a downturn in the near term as an industrial metal, but I'm thinking the endless money printing eventually brings it up from decadal lows.

This qualifies Otter.  Take some money upfront on shares that hedge your port.  Pretty much the same outcome as selling a near the money put on SLV.  You get paid today and you are OK with the outcome either way. There are months grabbing some income is the only reason I am up. Anyone selling options is spoiled right now with these premiums.

[fenders53]

Let this market run just a little higher and I will be executing some credit spreads. I am undefeated with those so I might as well push my luck lol. I was very close to doing it with a few oil majors today but the premiums are just not quite good enough for a proper risk/reward. My usual targets are DE and HD when they get frothy. This patience thing is challenging.

I am going to shop for another SPY put today. I sleep a little better holding a few of those. Wish I had bought them before volatility spiked but hindsight is 20/20.

[NilesMike]

(03-23-2020, 11:21 AM)john Wrote: Thanks Fender, this is my 1st covered call sell. Fairly new to options..
Have a question on Call options, OZK 5/15 22.50 strike, bid is .30 ask is .60 Last trade is 1.69
Why is the last trade higher then the ask?
Thanks, John

First off, you're going significantly OTM which can be problematic.

OZK options are thinly traded options overall

Consider stocks with tighter bid/ask spread

[john]

I have options questions.
I have mostly sold puts and a few covered calls. They have been standard options, with weekly options is there any difference except that you don't have as much time to adjust your trade if the stock starts to move in the wrong direction?
Is a weekly option preferable to a standard option or vice versa?

[ChadR]

john,

With options, whether the weekly or longer dated options is better depends on why you are making the option sale or purchase. When I think a stock is overvalued, instead of shorting it, I will buy a long dated put. In this situation, a weekly put wouldn't do me much good unless the stock dropped right after purchasing the option. If you are going after income, then selling weekly options is probably better.

Others in here know a lot more about options than I do and could give you a better explanation. Hope this elementary explanation does you some good.

[fenders53]

(04-04-2020, 09:24 AM)john Wrote: I have options questions.
I have mostly sold puts and a few covered calls. They have been standard options, with weekly options is there any difference except that you don't have as much time to adjust your trade if the stock starts to move in the wrong direction?
Is a weekly option preferable to a standard option or vice versa?

I answered your PM.  I'll repeat myself some here.  Structurally there is zero difference between a weekly option and a monthly.  When I buy options, which is rare, I desire more time so I can react, or just be patient.  Lately my game is selling options that expire in a day or two.  The market volatily gives them excellent premium value which erodes almost by the hour.  Pretty easy to roll them forward a week when that becomes necessary.  Usually I just take the 1-2% premium for a couple days of exposure to the risk.  That has about an 80% "win rate" if I choose my positions carefully.  This is very abnormal vs a "normal" market.  Usually you may have to sell about a month of time to get much over 1% unless the stock is always volatile.  It's rare when I sell an option dated much over a week right now.  You'll get backed deep into a corner fast if the market pulls back 2000+ points in a day, which has a greater than 50% chance of happening soon IMO. I just avoid the risk.  I am just trying to hit many singles and skim income.   It consistently works out.  I have sold long dated SPY puts.  Same goal, I won't get greedy trying to time the absolute bottom.  I feel no pressure to sell them in a few weeks if the market runs higher briefly.  They won't be worthless for a very long time.  No chance I would sell these same options I bought.

[john]

(04-04-2020, 11:26 AM)fenders53 Wrote:

(04-04-2020, 09:24 AM)john Wrote: I have options questions.
I have mostly sold puts and a few covered calls. They have been standard options, with weekly options is there any difference except that you don't have as much time to adjust your trade if the stock starts to move in the wrong direction?
Is a weekly option preferable to a standard option or vice versa?

I answered your PM.  I'll repeat myself some here.  Structurally there is zero difference between a weekly option and a monthly.  When I buy options, which is rare, I desire more time so I can react, or just be patient.  Lately my game is selling options that expire in a day or two.  The market volatily gives them excellent premium value which erodes almost by the hour.  Pretty easy to roll them forward a week when that becomes necessary.  Usually I just take the 1-2% premium for a couple days of exposure to the risk.  That has about an 80% "win rate" if I choose my positions carefully.  This is very abnormal vs a "normal" market.  Usually you may have to sell about a month of time to get much over 1% unless the stock is always volatile.  It's rare when I sell an option dated much over a week right now.  You'll get backed deep into a corner fast if the market pulls back 2000+ points in a day, which has a greater than 50% chance of happening soon IMO. I just avoid the risk.  I am just trying to hit many singles and skim income.   It consistently works out.  I have sold long dated SPY puts.  Same goal, I won't get greedy trying to time the absolute bottom.  I feel no pressure to sell them in a few weeks if the market runs higher briefly.  They won't be worthless for a very long time.  No chance I would sell these same options I bought.

Thanks Fenders, I didn't get your PM. Not sure why its not showing up    I appreciate you insight.

[NilesMike]

John,

Poke around in here and your learning will ramp up pretty quickly.

http://www.cboe.com/strategies/product-s...tegy/part1

[fenders53]

(04-04-2020, 12:04 PM)john Wrote:

(04-04-2020, 11:26 AM)fenders53 Wrote:

(04-04-2020, 09:24 AM)john Wrote: I have options questions.
I have mostly sold puts and a few covered calls. They have been standard options, with weekly options is there any difference except that you don't have as much time to adjust your trade if the stock starts to move in the wrong direction?
Is a weekly option preferable to a standard option or vice versa?

I answered your PM.  I'll repeat myself some here.  Structurally there is zero difference between a weekly option and a monthly.  When I buy options, which is rare, I desire more time so I can react, or just be patient.  Lately my game is selling options that expire in a day or two.  The market volatily gives them excellent premium value which erodes almost by the hour.  Pretty easy to roll them forward a week when that becomes necessary.  Usually I just take the 1-2% premium for a couple days of exposure to the risk.  That has about an 80% "win rate" if I choose my positions carefully.  This is very abnormal vs a "normal" market.  Usually you may have to sell about a month of time to get much over 1% unless the stock is always volatile.  It's rare when I sell an option dated much over a week right now.  You'll get backed deep into a corner fast if the market pulls back 2000+ points in a day, which has a greater than 50% chance of happening soon IMO. I just avoid the risk.  I am just trying to hit many singles and skim income.   It consistently works out.  I have sold long dated SPY puts.  Same goal, I won't get greedy trying to time the absolute bottom.  I feel no pressure to sell them in a few weeks if the market runs higher briefly.  They won't be worthless for a very long time.  No chance I would sell these same options I bought.

Thanks Fenders, I didn't get your PM. Not sure why its not showing up    I appreciate you insight.

I got a system message your private messaging is shutoff, but I did receive your's that I tried to respond to.  Go poke around in your forum settings.  It's pretty much what I said above though.  And as Mike suggests, do some reading and there are some good youtube videos as well.  You don't have to be an options expert overnight, but it's imperative you understand the basics or you are going to lose money.