The fancy equity derivatives vol arb thread... a.k.a. Options trading extravaganza

[52-80 19142]

4 hours ago, CooterBrown said:

My old eTrade account has paper trading so I'm testing the waters there.  I bought a call on SNDL (per Penelope mentioning it a few posts up).   2 March 19th contracts @ $1.10 with a strike price of $3.50.  Within a few minutes, I tested selling it to make sure I understood, and it said if I sold at that moment I would net $400+.  A few hours later it looks like it's down in the red $6 since purchase.

It never approached the $3.50 share price so how could it have ended up in the money? Was it because people were willing to pay more than the $1.10 I paid for the contract?

 

 

So you spent $220 for 2 contracts. 
 

Minutes later they were valued at -~$620 ($3.1/sh premium), to net you 400. 
 

Very plausible because SNDL went nuts today.  That position has total 120 points of delta, so every dollar move in the stock changes total value by $120. SNDL traded from 2.4 to almost touching 5 near the open. 
 

I owned 2022 expiring 2$ strike calls. Bought yesterday at open for 1.72. Sold today at open for 2.72. And if I held to close, they’d be worth only 1.52 now. Shit moves quick. 

[Chapo 104]

Going back in the well, sold 3/19 RKT $17 P and 4/16 BIGC $60 P.

[Trey3216 15343]

Just ran 10 contracts on a bull call spread on the RIOT weeklies at the 48 and 60 strikes for 2.63.  Hoping for a rebound in cryptos the next few days.  We shall see.  

[Cheeseweasel 26438]

17 minutes ago, Trey3216 said:

Hoping for a rebound in cryptos the next few days.

[Trey3216 15343]

10 minutes ago, Cheeseweasel said:

up30% on that trade right now.  I'll take it after this shitty ass day in stonks  

[52-80 19142]

4 hours ago, Chapo said:

Going back in the well, sold 3/19 RKT $17 P and 4/16 BIGC $60 P.

I’m in on that RKT. 
 

Rough day for everyone, but very few of my short puts breached ITM. It feels *slightly* better knowing you can wait out the market while theta going in your favor. 
 

(would feel much better if I had spare cash to act on the dip)

 

I’m also in on on SQ with a call debit spread aka bull call spread. Thought they would announce really healthy balance sheet with crypto marked-to-market. But that’s before crypto took a dive,,,,ans SQ apparently bought a ton at 51k. Wow. 

[Trey3216 15343]

Looks like my RIOT spread may hit max profit today

[52-80 19142]

1 hour ago, Trey3216 said:

Looks like my RIOT spread may hit max profit today

https://i.imgur.com/cXiS5Os.gif

 

[Trey3216 15343]

Long 10 TLRY 19 Mar 32.50C for 2.00  

[PenelopeWitherspoon 19100]

27 minutes ago, Trey3216 said:

Long 10 TLRY 19 Mar 32.50C for 2.00  

Well done.  You are already up 65 cents on that one.  

[PenelopeWitherspoon 19100]

My options, except for Ford, are all in the red.  I did calls, and the market plunged.  All are 4/16 or later.  Have the following:

10 4/16 ICLN $33C @ 0.43 (currently at 0.35)  

1 4/16 IDEX $5C @ 1.02 (currently at 0.67)

5 6/18 ADMP $4C @ 0.25 (currently at 0.20)

5 6/18 F $13C @ 0.832 (currently at 1.01)

Then I have a lot of UUUU plays

5 4/16 $8C @ 0.53 (currently at 0.45)

4 7/16 $6C @ 1.575 (currently at 1.58)

2 7/16 $8C @ 1.20 (currently at 1.08)

Want to close some of these, but need a market pick up.

Previously, I had closed a couple of SNDL positions where I made a lot of $$$, but I also closed an MJ and OGI position where I lost money as I didn't get out before the bleeding.  

 

[52-80 19142]

Gamble with a buttload of near-expiry RIG calls almost paid off.  took crap yesterday.  working its way back now.

 

also bought some leaps of CVS calls

[PenelopeWitherspoon 19100]

4 hours ago, Trey3216 said:

Looks like my RIOT spread may hit max profit today

Can you post how you accomplished that spread?  I am still learning on this front, and I am one that actually models it to understand the play.  

[PenelopeWitherspoon 19100]

3 minutes ago, 52-80 said:

Gamble with a buttload of near-expiry RIG calls almost paid off.  took crap yesterday.  working its way back now.

 

also bought some leaps of CVS calls

I have been looking for some leaps.  I have been contemplating a ST Workhorse play, but I am gunshy at the moment.

[Trey3216 15343]

7 minutes ago, PenelopeWitherspoon said:

Can you post how you accomplished that spread?  I am still learning on this front, and I am one that actually models it to understand the play.  

When I typed that, RIOT was trading over $58 in the pre-market.  

So the trade I made was I bought $48 strike calls for $3.51 and sold $60 strike calls for $.88.  Net cost to me was $2.63.  If RIOT were to go to 60 by friday ( it was trading in the mid 70's monday), my 48 strike calls would be worth 12 and the 60 calls would be worth 0, so my net would be $12/sh, or a 4.58x gain on my position.  

[Chapo 104]

1 minute ago, 52-80 said:

also bought some leaps of CVS calls

Just curious why you are bullish? seems like it is at the top range when looking at 3-5 yr chart

[52-80 19142]

1 hour ago, Chapo said:

Just curious why you are bullish? seems like it is at the top range when looking at 3-5 yr chart

better gross margins than walgreens.  healthy balance sheet.  pcr testing and vacc distribution.  and i need more stable symbols to balance out my meme-portfolio.

 

LT im more bullish in semiconductors

[PenelopeWitherspoon 19100]

3 hours ago, Trey3216 said:

When I typed that, RIOT was trading over $58 in the pre-market.  

So the trade I made was I bought $48 strike calls for $3.51 and sold $60 strike calls for $.88.  Net cost to me was $2.63.  If RIOT were to go to 60 by friday ( it was trading in the mid 70's monday), my 48 strike calls would be worth 12 and the 60 calls would be worth 0, so my net would be $12/sh, or a 4.58x gain on my position.  

So how did you pick a company to use this strategy on?  What expectation should you have on the stock to want to implement this strategy?

This is exactly what I want to do, multiply my investments.  

Tweed Chanel jackets are not cheap.

[Trey3216 15343]

3 minutes ago, PenelopeWitherspoon said:

So how did you pick a company to use this strategy on?  What expectation should you have on the stock to want to implement this strategy?

This is exactly what I want to do, multiply my investments.  

Tweed Chanel jackets are not cheap.

I like to look at companies whose stock I wouldn't mind owning, but want to own it on a cheaper basis.  I also look at momentum plays.  TLRY has several gaps that it could/should fill if there were some news to break (Virginia trying to get legislation done by this weekend for new weed laws for instance).  Then I try to find where the money works enough to give me a really nice return while also gaining some benefit from selling the higher call option.  RIOT worked in this instance because it is trading wildly with the price of BTC and other cryptos.  It traded up to $79.45 last wednesday and got abused yesterday and Monday due to the BTC pullback.   

[PenelopeWitherspoon 19100]

2 minutes ago, Trey3216 said:

I like to look at companies whose stock I wouldn't mind owning, but want to own it on a cheaper basis.  I also look at momentum plays.  TLRY has several gaps that it could/should fill if there were some news to break (Virginia trying to get legislation done by this weekend for new weed laws for instance).  Then I try to find where the money works enough to give me a really nice return while also gaining some benefit from selling the higher call option.  RIOT worked in this instance because it is trading wildly with the price of BTC and other cryptos.  It traded up to $79.45 last wednesday and got abused yesterday and Monday due to the BTC pullback.   

So, let's use Tilray for example.  If we think that Virginia gets that legislation put together, then 3/19 calls would work.  So you would buy a call just out of the money, maybe a 27.5 or 28 call, and sell a call at what level, 50 or 60?  Or would you do even shorter term?  What am I missing? 

[Trey3216 15343]

7 minutes ago, PenelopeWitherspoon said:

So, let's use Tilray for example.  If we think that Virginia gets that legislation put together, then 3/19 calls would work.  So you would buy a call just out of the money, maybe a 27.5 or 28 call, and sell a call at what level, 50 or 60?  Or would you do even shorter term?  What am I missing? 

I would buy one close to in the money or just out of the money, say a 29, and probably a 40.  But I'd buy the options for next week.  Right now, that would be a net debit of $1.40/contract.  So 10 contracts for 1400.  If it runs to 40, your position is worth $11k.  

[Chapo 104]

1 hour ago, 52-80 said:

better gross margins than walgreens.  healthy balance sheet.  pcr testing and vacc distribution.  and i need more stable symbols to balance out my meme-portfolio.

 

LT im more bullish in semiconductors

I hear you on the meme stocks. I'm taking penny stock profits and took the opportunity to buy OTM 2023 Leaps on AAPL and AMD. Expensive but sooner or later they will hit ATH

[PenelopeWitherspoon 19100]

3 minutes ago, Trey3216 said:

I would buy one close to in the money or just out of the money, say a 29, and probably a 40.  But I'd buy the options for next week.  Right now, that would be a net debit of $1.40/contract.  So 10 contracts for 1400.  If it runs to 40, your position is worth $11k.  

Would you be exiting these positions or letting them expire?  And if it runs to 40, the call you sold is in the money.  Do not think someone would exercise, but...

[Trey3216 15343]

26 minutes ago, PenelopeWitherspoon said:

Would you be exiting these positions or letting them expire?  And if it runs to 40, the call you sold is in the money.  Do not think someone would exercise, but...

If it runs to 40 on next friday, the call is theoretically worth 0.  It is only ITM if it's more than 40.  But your call that you own at the lower strike would be even more in the money, and by the amount that the call you sold is in the money.  so if the stock were at 40.15, then your 29 is worth 11.15 and your 40 is worth -.15.  So it's worth 11 net, which is all that matters.   

 

I'd exit before expiry.  

 

 

[Trey3216 15343]

Other trades from today:

L 50 TLRY 30 strike weekly calls @ .56.  Sold at 1.10

L 15 TLRY 29 strike weekly calls @ .41. 
Sold at 1.26

still holding my RIOT vertical spread.   It bounced around from being up between 80-150% today.  I think it pushes back toward $60/share by Friday and I collect max gain of $12.  
 

still holding 10 Mar 21 TLRY 32.50 strike calls at $2.00.  Closed the session @$3.55 and the stock was pushing up nearly $2 AH.   Could open over 30 which would put this option near $6 or better.  

[Hank_Hill 18788]

We going all in on high IV GME calls tomorrow or wut

[Trey3216 15343]

18 minutes ago, Hank_Hill said:

We going all in on high IV GME calls tomorrow or wut

I’m eyeing some.   I may try to chase some other names that could ride the wave, or I’ll just go loco and fuck around and find out with some of my TLRY crack profits

Edited February 25, 2021 by Trey3216

[Lobwedgephil 1139]

1 hour ago, Hank_Hill said:

We going all in on high IV GME calls tomorrow or wut

 

The 800 weeklies went from .01 to 1.44 in an hour this afternoon. Nothing better than FOMO'ing in the next day after the move has been made. 

[52-80 19142]

7 hours ago, Lobwedgephil said:

 

The 800 weeklies went from .01 to 1.44 in an hour this afternoon. Nothing better than FOMO'ing in the next day after the move has been made. 

sell the 25, 30, 35, 40, 45 puts

if IV continues to go more nuts, it might take a while for the position to become profitable.  if it doesnt, you'll profit (by buying back the puts for cheaper) from IV deflate alone.  there is -- it should be decently clear now -- extremely low risk of the stock cratering lower than those prices

Edited February 25, 2021 by 52-80

[PenelopeWitherspoon 19100]

So which trading platform is the best to use?  

[Trey3216 15343]

17 minutes ago, PenelopeWitherspoon said:

So which trading platform is the best to use?  

The one that locks you out from trading so you don't chase positions.  Glad I sold most of my stuff yesterday afternoon, but taking it on the chin today.  

[PenelopeWitherspoon 19100]

LOL.  Yeah, my accounts look like shit again today.  Tired of this.

[Trey3216 15343]

Currently staving off a completely horrendous day with some UVXY calls that I've more than doubled up on.

 

Bought 20 5 March 8 strike calls for .81.   Currently at 1.82.  

Still down about 20% today even with that luck.  

[Doc Holliday 199]

12 minutes ago, PenelopeWitherspoon said:

LOL.  Yeah, my accounts look like shit again today.  Tired of this.

Same, I am tied up in some long calls and straight stocks that are currently stonked.  

Check out AKBA.  Buddy of mine put 90% of his very nice portfolio balance on it and fully expects to be able to "retire" by end of the year if he wanted too.   I doubt he will as he's C-suite making bank and legit experience that will keep him in the bank for a couple decades.

Another long play is UWMC - mortgage company.  Bunch of analysts are buy.  I expect them to jump a good bit, need to hit 10.64 and stay above and I'll make a few k off it.  The feb crash has been brutal.

Edited February 25, 2021 by Doc Holliday

[52-80 19142]

1 hour ago, PenelopeWitherspoon said:

So which trading platform is the best to use?  

Think or Swim or Tastyworks

 

I grabbed a bunch of Gamestop Friday 800C for ~2$.  Filled early in the morning when price was just yoyo'ing.  Flipped them for ~3 until I broke even.  Now holding on the remaining in case price goes totally retardo at close/AH and can flip them for real money tomorrow.

 

That was the only fun of the day... rest of portfolio sucked ass.  long SQQQ and UVXY and VXX helped, but not enough

[PenelopeWitherspoon 19100]

33 minutes ago, 52-80 said:

Think or Swim or Tastyworks

 

I grabbed a bunch of Gamestop Friday 800C for ~2$.  Filled early in the morning when price was just yoyo'ing.  Flipped them for ~3 until I broke even.  Now holding on the remaining in case price goes totally retardo at close/AH and can flip them for real money tomorrow.

 

That was the only fun of the day... rest of portfolio sucked ass.  long SQQQ and UVXY and VXX helped, but not enough

I tried to do that too, and could not get the fuckers filled.  Oh well.

[PenelopeWitherspoon 19100]

1 hour ago, Doc Holliday said:

Same, I am tied up in some long calls and straight stocks that are currently stonked.  

Check out AKBA.  Buddy of mine put 90% of his very nice portfolio balance on it and fully expects to be able to "retire" by end of the year if he wanted too.   I doubt he will as he's C-suite making bank and legit experience that will keep him in the bank for a couple decades.

Another long play is UWMC - mortgage company.  Bunch of analysts are buy.  I expect them to jump a good bit, need to hit 10.64 and stay above and I'll make a few k off it.  The feb crash has been brutal.

Did your friend say that about AKBA before or after their earnings call today, since they missed earnings by 20 cents per share.  Interested, because I am going to do some due diligence and see if it is something I am game on doing a long term option play on.

[Doc Holliday 199]

He shared last week prior to the earnings call. 

Yes, he's dug into the research on it.  He's a finance guy as it is and why he went so hard.  He thinks their pipeline is going to blow up at some point this year. 

I put 100 in to watch it for a little bit and yeah, it took a hit too.

Edited February 25, 2021 by Doc Holliday

[Blotto 23486]

2 hours ago, Trey3216 said:

Currently staving off a completely horrendous day with some UVXY calls that I've more than doubled up on.

 

Bought 20 5 March 8 strike calls for .81.   Currently at 1.82.  

Still down about 20% today even with that luck.  

Bought some 25 Feb $10 strike calls for .06. this morning. Sold 1/3 for .26, another 1/3 for .68  still have the last 1/3. 

[PenelopeWitherspoon 19100]

I was stuffed out on GME and AMC calls, which would have made me $$$ this AM.  Fuckers.

Also, did not buy calls in Workhorse early in the day (was waffling on pulling the trigger).  Given what happened in power hour, major fuck up on my part.

Holding the following:

10 4/16 ICLN $33C @ 0.43

3 4/16 IDEX $5C @ 0.68 

5 6/18 ADMP $4C @ 0.25

5 6/18 F $13C @ 0.832

Then I have a lot of UUUU plays

5 4/16 $8C @ 0.53

4 7/16 $6C @ 1.575

2 7/16 $8C @ 1.20 

Want to close some of these, but need a market pick up.  Currently, everything red but Ford.  

I am not comfortable enough with any other options at the moment, so I am sticking to buying calls until I get better at this.  

[bluto 4912]

Caught the falling knife on cciv yesterday then flipped 25% this morning... doesn’t make up for the shit show else where though. Blood bath.

Tried to time the bottom today on AAL and CCL with some 3-4 month out ITM calls, aal already hitting.

Otherwise HEAVY action on EVFM March calls

[PenelopeWitherspoon 19100]

21 minutes ago, bluto said:

Caught the falling knife on cciv yesterday then flipped 25% this morning... doesn’t make up for the shit show else where though. Blood bath.

Tried to time the bottom today on AAL and CCL with some 3-4 month out ITM calls, aal already hitting.

Otherwise HEAVY action on EVFM March calls

Yeah, I was going to go in on CCIV yesterday, but I decided to hold off until the AM to see if the fall continued.  Hind sight is ALWAYS 2020. 

[52-80 19142]

6 hours ago, bluto said:

Caught the falling knife on cciv yesterday then flipped 25% this morning... doesn’t make up for the shit show else where though. Blood bath.

Tried to time the bottom today on AAL and CCL with some 3-4 month out ITM calls, aal already hitting.

Otherwise HEAVY action on EVFM March calls

i went short on AAL, UAL, LUV, CCL, and other travel stuff via long puts.  flipped them intra day for gains.  i think the travel sector will continue to be a bloodbath, worse than equities.  IATA forecasts are worse than expected.  airline cash burn are twice as bad as projected. etc etc etc

[PenelopeWitherspoon 19100]

So, I tried the strategy I missed out on yesterday this AM with GME and AMC.  It did not go well.  Sigh.  Oh well, ST Cap Losses to offset ST Cap gains.  

I just bought 5 135C AAPL for 3/26.  I think AAPL is cheap right now, so wanted to see if I can make a profit off of it.  

[52-80 19142]

11 minutes ago, PenelopeWitherspoon said:

So, I tried the strategy I missed out on yesterday this AM with GME and AMC.  It did not go well.  Sigh.  Oh well, ST Cap Losses to offset ST Cap gains. 

The most important thing is, you lost money alongside your friends, and had fun doing it. 

[PenelopeWitherspoon 19100]

1 minute ago, 52-80 said:

The most important thing is, you lost money alongside your friends, and had fun doing it. 

[Gourmand 7774]

Options noober seeking advice on a trade I made that isn't looking so smart right now. I need to practice for a few weeks in my paper trading account but I got my feet wet on a single contract. It won't kill me to get burned on it but I'd prefer to employ a halfway intelligent strategy from here. 

I bought a 19 March CURI $15 call for $4.10. I like the stock (closed at $17.31 yesterday) and think it will go up but I'm down right now of course and I'm looking at the erosion of time decay. What would you recommend I do from here?  TIA. 

[52-80 19142]

56 minutes ago, Gourmand said:

Options noober seeking advice on a trade I made that isn't looking so smart right now. I need to practice for a few weeks in my paper trading account but I got my feet wet on a single contract. It won't kill me to get burned on it but I'd prefer to employ a halfway intelligent strategy from here. 

I bought a 19 March CURI $15 call for $4.10. I like the stock (closed at $17.31 yesterday) and think it will go up but I'm down right now of course and I'm looking at the erosion of time decay. What would you recommend I do from here?  TIA. 

When you long a single leg option, you take a directional view. 
 

The only thing that matters now is the view going forward - how much you forecast the stock will be, and when. 
 

Then you can evaluate whether your option will gain or lose value relative to today (obv what happened in past no longer matters). Delta * price change vs days * theta. (This is a simplistic approximation assuming linear relationship…you can use online options calculator to do it better)

 

Because time erosion accelerates towards expiration, you only buy near-term options if you are very certain of the stock movement. If you want to express long term view, buy longer-term stuff  (“leaps”) where the erosion is lower and gives more time for the view to play out. 
 

If you think stock will go down or stay flat, sell the call and cut your loss. 
 

If you are hopefully it go will up, but don’t think it will go up that high and quickly, sell (short) a March 19 call at, say, $22.5 strike.  You effectively turn your long call into a long call spread.  The short 22.5c has offsetting effect on your long 15c. If price blasts above that, it limits your gain. If it doesn’t, it reduces your total theta loss. 

[Gourmand 7774]

thanks, @52-80 I will probably see what the market does the next week and maybe cut my loss and sell puts on that underlying stock instead. Coincidentally, I was just reading up and watching youtube videos on vertical call spreads as well so I think that will be something I might test out in my paper trading account when the market opens Monday. Now, just for educational purposes, how smart/dumb would it be to roll over the trade to April 16 at a 17.50 strike and get a small credit thereafter? I think you traders call that "rolling until you're right"?.....

[52-80 19142]

Rolling a long position is still maintaining a long position and thus, still requires that you establish a price and timing target to estimate profitability. 
 

Receiving a (small) credit shouldn’t be the incentive/determinant to roll, because it’s sort of ofuscating/masking the fact that you will close/mark a loss on existing position. 
 

The net effect of a roll is opening a NEW long April 17.5c. Does that in itself make sense to do? If it does based on your forecast (and it very well may), then go ahead and roll. If it doesn’t, don’t. 
 

What happened since you bought the March 15C until now is already passed, and the effect doesn’t change whether you close it independently or “package” it in a “roll”