All things STOCKS

[Thunder Good-Oil]

NVDA220819P180 ($2.00 sell limit)(quote: filled)
NVDA: $182.33 (quote)
NVDA: $188.79 (prev close)
NVDA: $185.23 (open)
NVDA: $181.90 (low)

 

[Velo Vol]

NVDA220819P180 ($2.00 sell limit)(quote: filled)

<trying to figure out this stuff>

Your trade will make money if Nvidia goes below $180 by the close Friday?

 

[Thunder Good-Oil]

<trying to figure out this stuff>

Your trade will make money if Nvidia goes below $178 by the close Friday?

That’s not what the 180 minus $2 means.

I sold the 180 put option that expires this Friday for $2. I want the share price to stay above $180 and the option will expire (and I keep the $2.

If the price of NVDA stock falls below $180, then I will have to buy the shares for $180 (not good if say the price falls to $175).

If I am forced to buy at $180, my actual cost is $178. When I sold the PUT, if I had instead wanted to buy NVDA shares immediately, it would have cost $182.33. So I may not end up owning NVDA stock, but if I do it will be at a cost of $178 which I like much more than $182.33.

The disadvantages are that (1) I may not end up owning NVDA shares. If I really want to own them and the price goes up through Friday, I will have to pay more than the $182.33 that I could have bought them for. The other (2) issue is that I have to have $18,000/contract available to buy the shares if the option hits. So each contract pays $200 BUT $18,000 needs to be on hand to buy each contract of 100x shares if the option strikes.

 

[Thunder Good-Oil]

I forgot to check the markets overnight early this morning and left money on the table with an AMAT call option trade. Somebody got a deal at my expense the moment the markets opened today. I sold the AMAT 180 call last week (for $1.75) and set up a limit or to buy to close at $80. I didn’t adjust it to a lower limit overnight as AMAT was falling. I didn’t get a price improvement on the trade at the opening bell as each option is very thinly traded.

So I’ve now made 2 pretty dumb errors. The earlier one was a month ago (my first option trade since buying some call options years ago). I meant to sell the CALL option on MicroStrategy and didn’t notice my screen (on my iPhone) was set to sell the PUT. I saw the mistake when it immediately executed (luckily with a price improvement) so I set a limit order to buy to close out the trade and I was lucky that it executed a few hours later.

There’s little forgiveness for mistakes. The institutions and other big players are on the other side of these trades. You have to be sharp to avoid the errors.

 

[Thunder Good-Oil]

NVDA stock is at $182.85. I’m thinking about making another PUT sale ($182.5) that expires on Friday. That is only a few cents away from hitting and I’d be forced to buy shares at $182.50, but the option would pay me about $2.80 right now.

The 52-week high for NVDA is $346.47 and it’s far from a garbage company. I don’t mind owning shares at $182.50 (or at the $180 that I sold earlier today).

 

[TN404]

BBBY is entertaining to watch as maybe the next maybe true meme stock

 

[Velo Vol]

Oh, I overlooked the "SELL."

So the buyer could require you to sell shares (which you don't now own?) at $180.

Where does $178 come from?

If I am forced to buy at $180, my actual cost is $178.

 

[Thunder Good-Oil]

BBBY is entertaining to watch as maybe the next maybe true meme stock

They are seriously facing bankruptcy though. It will help them tremendously if they have everything in order to sell a bunch of their own shares in the public market with the recent Wall Street Bets fueled surge. Their employees that have stock based compensation awarded shares that they are free to sell them are (undeservedly) cleaning up.

 

[Thunder Good-Oil]

Oh, I overlooked the "SELL."

So the buyer could require you to sell shares (which you don't now own?) at $180.

Where does $178 come from?

i would be forced to BUY shares at $180. I want the share price to stay above $180. If the share price pops to $185 nobody that owns the put option will force me to buy at $180.

$178 would be my cost per share if I am required to buy shares at $180. I already have the $2 in my account.

 

[Thunder Good-Oil]

I’m selling the option that would force me to buy the shares. I sold the PUT option.

Buy PUTS - bearish
Sell CALLS - bearish

Buy CALLS - bullish
Sell PUTS - bullish

 

[mrorange211]

Gonna be interesting to see what happens once FOMC minutes are released in 30 mins.

 

[Thunder Good-Oil]

I’m playing with very basic options strategies. There are very complicated approaches that I can’t explain (right now).

Option Trading Strategies | Option Strategy - The Options Playbook

 

[Thunder Good-Oil]

Gonna be interesting to see what happens once FOMC minutes are released in 30 mins.

I could end up owning a lot of NVDA shares if the markets tank.

 

[Velo Vol]

I’m selling the option that would force me to buy the shares. I sold the PUT option.

Buy PUTS - bearish
Sell CALLS - bearish

Buy CALLS - bullish
Sell PUTS - bullish

OK. I still have to think through this stuff and inverse trades add another layer of complexity that could derail my slowly turning thought wheels.

 

[Thunder Good-Oil]

OK. I still have to think through this stuff and inverse trades add another layer of complexity that could derail my slowly turning thought wheels.

I’m just picking out a small area and focusing there. Buying CALLS is typically the easiest to understand as it kind of mirrors the price movements of the shares of stock. BUT - most calls will expire worthless. On the other hand, an advantage is that your maximum loss has been defined by your cost to purchase the options contracts.

Buying PUTS on shares of stock that you own is a way to hedge your potential losses if you already own the shares. Say you own 100x shares that are selling at $100/share. You have $10,000 invested. You could buy, for example, one PUT contract with a $90 strike and your loss is limited to $100 - $90 = $10/share ($1,000) plus your cost of buying the put option contract. But the put contract also expires at some date.

Selling naked CALLS is extremely dangerous. Those that sold naked CALLS of BBBY are getting obliterated right now. I’m ONLY selling COVERED (not naked) calls. I risk losing my shares if the stock price soars - so my risk is an opportunity cost.

Selling PUTS requires having enough purchasing power or cash in the account to be able to buy 100 shares per each options contract sold.

 

[Firebirdparts]

.....

 

[Thunder Good-Oil]

What I’m doing is making some options trades. That’s very different from being an options trader. To be an options trader I think that you’ll need to have several computer screens on your desk and you’d also need to be able to stay very focused for hours on end. I’m too old for that.

I’ve made 2 watch lists of stocks and sort them on the percentage change for the current day.

One list is of stocks that I own at least 100 shares of (each options contract is for 100 shares). I exclude stocks that are currently worth less than what I paid for them (personal preference - I want to decide exactly when, if ever, that I sell shares at a loss). I only include on this watch list shares that I don’t mind selling - so I exclude my core, long term holdings. If from a taxable account I also want to avoid taking a big profit on the shares and having to pay the capital gains tax (I prefer using my IRA accounts to avoid taxes on trades of both options and shares - since I’m only selling puts and calls, I won’t have a wasted tax loss inside of an IRA). So I look at the biggest current day percentage gainers from this list as the markets open. I will consider selling call options on the stocks in the list - especially those that have had a crazy jump in today’s price. As long as the stock prices stay high, if I’ve sold the covered calls I get to pocket the “free” proceeds from selling the call options. I’m keeping the expirations near. This Friday, next Friday, or the Friday after that.

My other watch list (for selling PUTS) is of stocks that I’m considering buying. Sorted on the current day’s percentage once again. So I look at the stocks with the biggest declines in share price. If I see something that I would like to own, I sell the put contract with a strike price even a few percentage points lower than the current price. If the shares rise in price, I won’t own the shares of stock - but I will get to pocket the “free” proceeds from selling the put options. If shares continue to fall, I’ll probably end up being forced to buy the shares, but I will own a bit cheaper than where the shares traded before I sold the put option contract(s).

 

[Thunder Good-Oil]

Initially I was going to try to use the Wheel Strategy. I’m not doing that at all right now. I might be doing a modified version of it - I’m looking at either side separately instead of systematically executing one option trade as soon as the other executes.

What is the Wheel Strategy in Options Trading? - OptionsPlay

 

[Rasputin]

BBBY is entertaining to watch as maybe the next maybe true meme stock

Do you think it's too early to buy puts?

 

[Thunder Good-Oil]

Do you think it's too early to buy puts?

They’re expensive. Lots of BBBY PUT buyers out there ATM.

 

[Rasputin]

They’re expensive. Lots of BBBY PUT buyers out there ATM.

They are dear, but you know a drop is coming. The question is when and how far.

 

[Thunder Good-Oil]

They are dear, but you know a drop is coming. The question is when and how far.

No, they are crazy expensive. 8/19s.

Dear? Okay, Schmoopie.

 

[Rasputin]

No, they are crazy expensive. 8/19s.

Dear? Okay, Schmoopie.

Maybe I should have said expensive. I was looking at single digit strikes for the Sept 16 expiration.

 

[Thunder Good-Oil]

Maybe I should have said expensive. I was looking at single digit strikes for the Sept 16 expiration.

The premium for volatility makes them unattractive to buy IMO. WSB can keep the shares overpriced for a long time considering the smallish market cap. Also, if the company is actually able to unload a lot of treasury shares at the jacked up price then they could prevent, or at least delay, bankruptcy.

The big boys on Wall Street aren’t likely to be able to get bailed out like RobinHood did by blocking GME share purchases. Look at what has happened to HOOD stock since they pulled that crap.

 

[Vol423]

They are dear, but you know a drop is coming. The question is when and how far.

How about in today's after hours trading? I imagine this will absolutely implode tomorrow.





Ryan Cohen files to sell entire position in Bed Bath & Beyond