What’s up Reddit community. Recently I’ve decided to take a more aggressive approach to trading in an attempt to earn more capital quicker in order to take certain positions with other up and coming stocks I’ve been monitoring. So, I’ve decided to try my hand at options after about roughly a month of bouncing around with the idea and doing my research. Here are 3 calls I’ve taken to start the month of December. I’m trying to play it safe but I’ll probably end up buying more calls on OPTT because the risk is so low, and perhaps more into CABA. Despite their field being generally known to be risky, they’ve got a lot to show for the progress they’ve made so far. Aside from vanguard taking a pretty heavy position in the stock as well only a month or a few months ago. Any feedback appreciated. Let’s prove ourselves right boys. Happy December and Happy Trading

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This does not really explain why Apr 35 call has the highest premium. To me it appears Aug 6 35 has the most but some hand-wavy thing says Apr 35 is the best. I am clearly missing something

If I has a100 shares of SPY and sold a covered call, which gets exercised. This would lead to my 100 shares getting sold so now I would have to pay capital gains ? If these were recently acquired shares, it would be short term capital gains ?

What started off as a small trade to get some premium now has turned into a capital gains nightmare.

am I right in assuming this risk exists ? how do people mitigate this ?

Hi y’all so i have about 7000 dollars in buying power want to do some CSP, which stock would you recommend. I was thinking TQQQ?

Following up on a few previous posts where I discussed the concept of profit mechanisms, I want to expand the idea more here.

Tl:Dr; most of us dive into what option structures or strategies we think are “best”. However, the true initial focus HAS to be on identifying profit mechanisms, which is the underlying force that yields profit from a trade. It doesn’t matter what deltas or DTE you pick for your long call if the underlying goes down. There are (4) main steps I built for myself in building strategies: 1. Profit Mechanism, 2. Profit Mechanism Type & Signals, 3. Structure Fitting, 4. Strategy Creation. This post covers #1 and #2.

First, nothing here is novel or unique. This is simply a framework I’ve build for myself to streamline the trading process.

The idea of profit mechanisms (PM) is to very discretely and accurate identify root cause of trade performance. This sounds straight forward but the majority of us have had tons of trades that moved in ways we didn’t understand at all and this is primarily due to misunderstanding PMs.

As an overview, I bucket profit mechanisms in step 1 into their simplest forms (taking a page out of the stoic practice of radical objectivity and essence). The purpose is to make it crystal clear HOW a trade primarily makes money.

For example, you’ve likely heard things like you shouldn’t buy options when vol is expensive or sell when vol is cheap. This is a primary example of false attribution and misidentifying root cause. Some of the absolute BEST times to sell volatility IS when it’s low to capture variance risk premiums (profit mechanism here is structural volatility / risk premiums).

Similarly, sometimes buying options even though vol is high can be extremely lucrative, provided you get an accommodating move - the profit mechanism in this case is price direction, up (delta).

Another example is when traders sell options and mistakenly believe volatility is their primary edge. Unless the trader is delta and gamma hedging to purely isolate vol, there is a significant directional component to these trades. If we sell a call, and volatility contracts but price moves against us in a meaningful way, we still lose. Yet, if vol expands but price moves in our favor meaningfully, we still make money. For a short call, the primary profit mechanism is price direction and secondary is theta decay and volatility.

The next step is to more carefully define the “Type” and signals.

Type zooms in one level from a profit mechanism to quantify and qualify the specific behavior. For example, price direction up can come in many types: breakouts, drift, momentum, value, etc. The purpose of this step is to again have completely clarify of root cause behavior of something we can then trade.

Signals are designed to measure the behavior of the profit mechanism and type, for analysis of robustness, severity, and ultimately allow probabilistic framing of future occurrences. Signals MUST match the profit mechanism and type.

For example, we might identify that puts tend to trade more rich comparatively to calls. After popping on SSRN to search for existing research to bolster our understanding of the phenomenon, we learn that variance risk premiums are a form of systemic overpricing of volatility that often is found more pronounced in puts.

To measure this, we might plot IV and RV for various timeframes (which is slightly different than HV and more appropriate in general for this) along with IVP (which is better than IVR), etc. The concept here is thinking through what signals are most likely to help us measure and predict the profit mechanism.

Another example could be for breakout strategies, we might use various TA indicators but if our average holding duration is 5 days, it’s unlikely that we want to start off studying the 252 day MA we might eventually get there, but it’s likely less applicable than shorter term MAs.

So how do we bring this all together? Simple - a trading plan to outline the ideas and metrics we want to track along with what we expect to see and a trading log to track our findings. Again, nothing novel but hopefully a useful framework to help explore your ideas more efficiently - it’s been tremendously helpful for me.

Which is a more conservative* approach to SPY:

Selling a deep ITM cash-secured put LEAP

vs buying a deep ITM long call LEAP.

*assuming you will sell shares ASAP if the put is assigned and the price is moving against you.

I have been doing a lot of research on option trading itself but haven’t considered all the different broker accounts. I do not want to trade on margin so I am not sure which brokers are a good idea. Thoughts?

https://x.com/markettrendai/status/1863368434194792785?s=46&t=o6K8yGemcoy_fF1KyS-QHg

Based on the available data and posts from X, there are several indications for the potential movement of $NVDA stock price in the week starting December 2, 2024:

• Technical Analysis: Posts on X from users like @LiviNinja and @TheRealNasa00 suggest an ongoing bullish trend or potential for upward movement. @LiviNinja specifically mentions $160 as a possible target, which would imply an upward movement from the last known closing price of $138.25 on November 29, 2024. @TheRealNasa00 focuses on trading around the previous all-time high (ATH) of $140.74, suggesting that surpassing this could lead to further gains, potentially aiming for $144.23.

• Price Targets and Analyst Predictions: Analyst predictions from posts, such as those from @TrendSpider, indicate significant upside potential with Rosenblatt raising its price target to $220, which is +55% from the current price around November 21, 2024. However, this is a longer-term target rather than a weekly prediction.

• Historical Data: The recent price action shows volatility with a closing price of $138.25 on November 29, 2024, after experiencing a range between $131.8 and $139.35 over the previous week.

• Sentiment on X: The sentiment from X posts seems cautiously optimistic, with mentions of a "Santa Rally" and potential breakouts above key levels like $145-$147 by @StockXcapital. However, there's also an acknowledgment of the possibility of downward movements if certain supports are broken.

Given this information:

• Upward Movement Probability: From the technical levels and sentiment expressed, if $NVDA breaks above recent highs like $140.74 or the $145-$147 range, there's a suggestion of an upward trajectory. However, exact percentages are speculative. Based on the implied moves mentioned in posts (like the 8% implied move on earnings from @TrendSpider), if we assume a similar volatility or reaction to market conditions, we might see:

  • Optimistic Scenario: A potential move towards $144.23 or higher could represent an increase of approximately 4.3% from the last known price of $138.25. If it reaches $160 as suggested by @LiviNinja, that would be an increase of about 15.7%.

  • Pessimistic or Neutral Scenario: If $NVDA fails to break through these resistance levels or sees a false breakout, the stock might consolidate or even dip back to support levels like $132 or lower, indicating little to no upward movement or even a decrease.

Given these insights, without exact percentages from credible sources for this specific week, a reasonable assessment might suggest:

• Probability of More Upward Movement: Around 50-60% based on the current bullish sentiment, technical analysis, and the potential for a year-end rally, but with significant caveats due to market volatility and the risk of false breakouts or bearish reversals.

Please note, this is an interpretation based on available data and should not be taken as investment advice. Market movements can be unpredictable, and this assessment combines both quantitative data and qualitative sentiment from X posts.

Hello. I usually take options with an IV below 100%, but lately, I've been reading posts suggesting keeping it below 80%. Also, since I buy LEAPS, a theta of 2 doesn't bother me, but many aim for a theta below 0.7, which is very rare to find, at least in the stocks I look at. Any suggestions for finding something with low theta? I buy ATM and ITM

I believe that OPTT is potentially going to skyrocket. I’d like to make a play on calls but the numbers swim when I try to navigate the screen. Is there a step by step simulator that lets me input what I’m looking for and explains each step? I’ve done well with stocks and etf’s but want to make a long play. Thanks

What is the ideal DTE for selling puts. I’ve noticed the longer the time to expiration, the greater the delta and the higher the premium, but I’m sure there is a diminishing return since my money is tied up for longer.

Im looking at $ACHR bear spread at 8.5/9 expiring at 3 jan 25.

What happen if i scoop in all of these and exit it before the expiry date and maybe exit it when price drop,

No way i can get free money with this.

I bought 50 shares of PHUN at $13.09. Now, the share price is $4.64. I have no experience trading options, but I'm considering buying another 50 shares of PHUN and selling them using options after I learn more about how it works. Would it be a good idea?

I’ve sold covered calls 14 months out for all stocks in my portfoljo. I’ve generated 30-50% premium vs stock price for all of my shares, with that money I reinvest the premium to get free leverage.

I did 14 months out so the gains are capital gains, not normal income.

I see people saying monthly is better than 1 year because you aren’t locked in / have more flexibility, but these gains are taxed as income?

I can’t imagine the returns are higher doing that, even if you do get monthly compounding from premiums.

Does anyone have any insight on this that would convince me to sell monthly OTM covered calls vs 14 months? I do 14 months because I want a buffer if someone exercises early, figure everyone will just trade the contract due to value of theta until it collapses towards the end

Hi everyone, I have a quick question. Say a stock is being traded currently at $15. I sell 10 contracts with strike price $13. I collect the premium immediately, if stock stays above $13 I don’t get assigned shares?

What if I just set a strike price so low, collect premiums indefinitely? Hypothetically unless it significantly drops.

Hoping for insight from any well seasoned traders wheeling etc.

Hi all, I set up a box trade a few months ago. Thanks for all of your help! In general, it worked out well. However, I’m in a position where I now need to liquidate most of my brokerage account holdings and had a few questions...

1. What would happen if I liquidate all of my brokerage account and only keep the box trade open? My understanding is that would trigger some sort of margin call, correct?
2. If the above is true, what is the minimum that I need to keep in my account as cash that would allow the box trade to not get called? Is this a good option to do?
3. I am attaching a screenshot of the current box trade. It is 8 open contracts and I believe the amount owed is roughly $76,500. Is there a way to confirm the exact amount?
4. In general, is closing a box trade early a bad option? My rough calculation is that closing the box trade today would I would pay ~$1644 in interest, which annualized would be $4687 (box trade was opened on July 26). Annualized that would 6.2%, whereas the box trade was opened at ~ 5.5% interest.

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Seeing a lot of chart positives here after E&Y bouncing .. the drop.. and then news of BDO USA coming onboard and NASDAQ accepting their compliance plan. Anyone following SMCI in here?

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I'm looking to buy leaps to reach long term capital gains tax status on a popular ticker, let's use SPY as an example. Here are the 2 strategies.

1. Buy ITM calls, such as spy 500c, and hold until Jan 2026
2. Open a Call spread, such as long 600c short 700c.

My concern about buying ITM calls and holding for a year is that I'll lose theta over time. Opening a spread hedges against this but also caps upside. Am I overstating the concern of losing theta over a year? Or is the spread the better way to go?

I have been trading future market for little while. But I want to start option trading with 100 dollar. I need a quick suggestions on how do I choose stock to put on my watchlist that I can trade with 100 dollar?

Got hit pretty good on some short options during the Aug 2 - Aug 5 vol expansion and am wondering if I can use this opportunity to get out of a long equity position that I want to get out of. The long equity position is mostly long term aside from DRIP and the options I took a hit on are section 1256.

Is the long term gain of the long equity position offset by both the long term and the short term losses of the options positions? Or is it only offset by the long term part? Thanks in advance

Currently have fidelity and they wont allow 0dte options trading for accounts with less than $1M USD. I also have Schwab, which allows 0dte w/o an acct min, but Think or Swim has been horrible to use since the switch from TDA.

Are there any other brokers that allow 0dte trading without any account minimum?

Hi All,

I am new to options trading. I got involved with LUNR and ACHR (long calls) and have made some decent money. Here is my question:

- Only involved with long calls, typically 2-4 weeks.

- I typically never exercise my option to purchase shares. Only interested in buying a contract and then selling when I see >200% total ROI
- Is it common to sell these options before the strike price on the contract has been hit?

- If my plan is to just buy a contract (in anticipation that the stock will rise) and then sell the contract a week or two later for profit, is it better to buy:

1. Longer-dated options with high strike prices and low premiums
2. shorter-dated options with high strike prices and low premiums
3. Loner-dated options with lower strike prices and high premiums
4. shorter-dated options with lower strike prices and high premiums

- Additionally, is it true that if I buy a contract and the underlying stock price increases by as little as 1%, my contract is already worth more, regardless of the strike price i chose?

I know time decay is a factor as well, so please work that into your responses as you see fit.

Trying again to post this as the bot mod keeps removing it all the time.

hopefully there is a video attached. 500 bucks well spent on the Quest 3 VR headset

office

Hi, hope y'all copped sum nice shit for black Friday.

I'm a 19M going to uni and my portfolio has skyrocketed about 100% in the last 1-2 months. Thing is that basically every trade I feel guilty for not putting in MORE equity when it wins (like I'm pissed at myself?). But also I know I am doing a good job properly managing my equity, especially keeping low options n crypto sizing. Anyone got advice regarding this feeling or am I alone in this? Should I jus say fuck it and go riskier?

Hi everyone, is anyone here actively trading 0DTE options on SPX? I’d appreciate it if someone could share insights on the capital required to sell a one-lot straddle, along with details on fees, brokerage, and contract size. I’m exploring SPX trading opportunities and would value your guidance.

Really looking for a concise book, that is outlined and maybe even reads more like a college textbook. I’m looking for a read that starts at the very beginning and goes in depth on pretty much all things options. While also supplying visual aids like graphs, math equations (if needed) ect.

I’m doing well and understand the basics and have success playing the market with options already, but where I’m at now with the learning… my mind can’t really pick a niche or topic to start studying to go “deeper” and learn the more advanced stuff.

I enjoy reading, and that’s where I tend to learn the most.

Looking at either options as a strategic investment or volatility and options pricing.

I’ve heard good things about both

When opening an iron butterfly on SPX, has anyone ever gotten filled at 4.95 on a 5-wide spread?

When trying to simulate execution historically, using the mid-price of the butterfly becomes too unrealistic but so is using the natural value. I am testing things like mid price minus .15, but until market opens I can’t test truly get a good grasp on execution.

So, has anyone been able to sell an SPX iron condor at a price that close to the spread width?

This is perhaps a silly question for most of you, but I appreciate any help you may offer.

I have been rebalancing my stock portfolio, doing some tax harvesting, and getting ready to open a new long SPY position. I was about to place a buy order for 100 shares with a limit price of 590. It then occurred to me that I could just sell one of these following puts and get some sweet additional premium in the process of getting these SPY shares assigned:

• SPY Dec02 '24 $590 Put (Bid 0.03)
• SPY Dec31 '24 $590 Put (Bid 3.41)
• SPY Jan31 '25 $590 Put (Bid 6.37)
• SPY Feb28 '25 $590 Put (Bid 8.64)
• SPY Mar31 '25 $590 Put (Bid 10.89)
• ...
• SPY Sept19 '25 $590 Put (Bid 20.66)

Thus, my questions are:

1. Am I missing something? Or is it really that simple?
2. Should I select the put that expires as late as possible (Sept. 19 2025 seems to be my case), since it provides the juiciest premium ?
3. Similarly to the previous question, should I select a strike that is essentially equal to market price, so that I can maximize both my premium and chances to be assigned ?

Thanks !

I have been working on a strategy and would like to hear Reddit's thoughts.

The Strategy-

- Place the trade only on Mondays and set the EXP to the following Monday.

- Sell the put that is closest to the 0.14 Delta.

- Buy a put with the same EXP with a Delta of -0.03

- Close any winning trades at 60% profit, DO NOT reopen a position until the following Monday even if you close for a profit.

This strategy has been working great for me for the past few weeks and would like to hear your thoughts.

I believed this strategy to be almost "too good" so I downloaded a backtesting software and began running it for the past 5 years on the SPY. The results were you made 151% over those five years vs 90% if you just held. Your max drawdown was 24% vs 34% if you just held. So it passed my backtest and the only real-time this strategy doesn't work is if the underlying asset (SPY) tanks hard (Normally 10-30$ in one week). You would have had only 13 losing trades/weeks if you ran this for the past 5 years! Another key point to mention is this is under the assumption you never stop trading and that means during the ENTIRE covid pandemic you never once thought to yourself to stop trading until the price hit a major low or started correcting. I will provide some more information below if you want it on shorter backtests.

Data

Past 5 years - 151% vs (Buy and Hold)90% - Drawdown 23.85% vs (Buy and Hold)34.1%

Past 3 years 58.56% vs (Buy and Hold)27.19% - Drawdown 29.2% vs (Buy and Hold)25.36%

Past 2 years 50.88% vs (Buy and Hold)47.98% - Drawdown 16.73% vs (Buy and Hold)10.29%

Past 1 year 45.25% vs (Buy and Hold)28% - Drawdown 8.04% vs (Buy and Hold)8.41%

FROM THE CURRENT DATE 11/30/24

Edit-

You can also sell more aggressively with your deltas if the stock drops 15-25$ in a week for the next few weeks, this change would increase your % by about ~8-12 yearly. Another modification you can do to be "safer" is to only sell the spreads when the stock is in the middle or on the lower sections of the Bollinger bands, this will however negatively affect your returns as you in essence are attempting to time the market.