Stock Markets
22,105,978 Views |
224613 Replies |
Last: 1 min ago by Heineken-Ashi
I need some input regarding using covered calls to recover from a bad trade. OA mentioned at one point that he used covered calls to drop his effective basis on some shares that had decreased in value as opposed to just selling them at a loss.
My question is if I want to use this strategy, where should I be setting the strikes on the calls sold? Above my original basis? Above my adjusted basis? Should I base it solely on the delta of the call sold, so if it's assigned my loss is less than it would've been?
My question is if I want to use this strategy, where should I be setting the strikes on the calls sold? Above my original basis? Above my adjusted basis? Should I base it solely on the delta of the call sold, so if it's assigned my loss is less than it would've been?
there may not be open interest above your cost basis. if you want to recover, the fastest (and riskiest way) is to sell calls that are close to at the money. Maybe sell weeklies?
That's why I threw in the Delta option. I'm thinking if I sell weeklys around .30-.40 delta, then I should still get a decent premium, but don't run substantial risk of being assigned. For example, I'm in SDC at an 8.70 basis, unfortunately I bought in right before their last earnings report. Its currently trading at 7.5, and the B-A for the 7/2 8c (.283 delta) is .10-.20. The 7/10 8c (.3467 delta) is .25-.30
https://www.bloomberg.com/news/articles/2020-06-28/chesapeake-pushed-into-bankruptcy-by-plunging-energy-prices?utm_content=business&utm_source=twitter&utm_medium=social&utm_campaign=socialflow-organic&cmpid=socialflow-twitter-business&__twitter_impression=true&__twitter_impression=true&__twitter_impression=true
I don't know anything about them, but why do you think it won't recover?
Another alternative to consider is if it drops further, you may be better off just taking the L, unless you want to keep it a long time.
Another alternative to consider is if it drops further, you may be better off just taking the L, unless you want to keep it a long time.
One thing I would recommend is to immediately disregard what you paid for the stock - that is water under the bridge at this point. The current price is what it's worth. Your thought process should be more about if you didn't hold it already, would you buy the stock at today's current price? If the answer is yes, then continue to hold it, including potentially selling covered calls on the position. If the answer is no, you should sell it now - what you paid for it is a sunk cost, and shouldn't factor into your decision-making and analysis (except maybe for tax planning).AGSmith said:
That's why I threw in the Delta option. I'm thinking if I sell weeklys around .30-.40 delta, then I should still get a decent premium, but don't run substantial risk of being assigned. For example, I'm in SDC at an 8.70 basis, unfortunately I bought in right before their last earnings report. Its currently trading at 7.5, and the B-A for the 7/2 8c (.283 delta) is .10-.20. The 7/10 8c (.3467 delta) is .25-.30
Hope that helps.
Charismatic Megafauna
Joined:
May 22, 2017
Posts:
7,607
How long do you want to ignore this user?
AG
Great advice in these last 2 posts. I have a hard time convincing myself that the price i paid doesn't mean anything, but it's true. If you wouldn't buy it at today's price, you shouldn't be holding it.
Excellent video without all the discussion. With essentially everything being bearish, that means we will gap up +4% tomorrow.
Every knee shall bow and every tongue shall confess
DON'T TREAD ON ME
AGSmith said:
That's why I threw in the Delta option. I'm thinking if I sell weeklys around .30-.40 delta, then I should still get a decent premium, but don't run substantial risk of being assigned. For example, I'm in SDC at an 8.70 basis, unfortunately I bought in right before their last earnings report. Its currently trading at 7.5, and the B-A for the 7/2 8c (.283 delta) is .10-.20. The 7/10 8c (.3467 delta) is .25-.30
Wasn't this just at 10+ a few weeks ago? May be a bit premature calling this one dead
because you're a glutton for punishment? I read it some. It's hard for me to sift through the positions because they tend to be extreme both ways and delivered in long form. The people posting there are a lot more passionate about responding on the threads than I am. I don't know how open anyone is to changing their mind on their position either. I'll take the COVID stuff as an example, you will not convince anyone there that it is serious disease if they think it's trivial and vice versa.OverSeas AG said:
Why am I addicted to the politics board? SMH.
i could see up 1%Carlo4 said:
Excellent video without all the discussion. With essentially everything being bearish, that means we will gap up +4% tomorrow.
Every knee shall bow and every tongue shall confess
DON'T TREAD ON ME
We should be testing 2964 tonight.
What it does from there should determine the next couple of weeks.
What it does from there should determine the next couple of weeks.
decent gap down
Under 3000 right now
off of June 8 top, ~2980 is a .236 retracement. should see a bounce for a bit.
The Pilot said:
Under 3000 right now
Not to break up the bear fest, but also about 2,995.00.
Edit: market is cratering... 2,992
Something to keep in mind. The media is flooding the public with "catastrophic" spikes in covid cases and hospitals are being overrun, just keep your eye on the death totals. If deaths don't mirror this armageddon scenario then the markets will rally. JMO
Prognightmare said:
Something to keep in mind. The media is flooding the public with "catastrophic" spikes in covid cases and hospitals are being overrun, just keep your eye on the death totals. If deaths don't mirror this armageddon scenario then the markets will rally. JMO
Which is so far what's happening and hopefully stays that way
Prognightmare said:
Something to keep in mind. The media is flooding the public with "catastrophic" spikes in covid cases and hospitals are being overrun, just keep your eye on the death totals. If deaths don't mirror this armageddon scenario then the markets will rally. JMO
They won't. Media has an agenda, doesn't even need to be political... disaster drives views (COVID, weather, riots, earthquakes, second coming, etc)
True but fund managers, who actually effect the market, pay attention to the fine print.topher06 said:Prognightmare said:
Something to keep in mind. The media is flooding the public with "catastrophic" spikes in covid cases and hospitals are being overrun, just keep your eye on the death totals. If deaths don't mirror this armageddon scenario then the markets will rally. JMO
They won't. Media has an agenda, doesn't even need to be political... disaster drives views (COVID, weather, riots, earthquakes, second coming, etc)
Look, Ma, it's over 3000
topher06 said:Prognightmare said:
Something to keep in mind. The media is flooding the public with "catastrophic" spikes in covid cases and hospitals are being overrun, just keep your eye on the death totals. If deaths don't mirror this armageddon scenario then the markets will rally. JMO
They won't. Media has an agenda, doesn't even need to be political... disaster drives views (COVID, weather, riots, earthquakes, second coming, etc)
This. Whatever sells ads will be reported most. Violence, disaster, and drama do that the most. Both sides.
I think we all know the media likes to make money
But... like... that doesn't mean the COVID cases aren't bad. First you get positive tests, then hospitalities, then ICU pop, then deaths. Even if the death rate for COVID goes down we don't want hospitals at 100+% for a number of reasons.
But... like... that doesn't mean the COVID cases aren't bad. First you get positive tests, then hospitalities, then ICU pop, then deaths. Even if the death rate for COVID goes down we don't want hospitals at 100+% for a number of reasons.
Yep, regardless of headlines, I think we return to 2800. The run up from there though will be epic.aggiedaniel06 said:
We should be testing 2964 tonight.
What it does from there should determine the next couple of weeks.
3 day weekend coming, no one will want to go long before it.
gvine07 said:
I think we all know the media likes to make money
But... like... that doesn't mean the COVID cases aren't bad. First you get positive tests, then hospitalities, then ICU pop, then deaths. Even if the death rate for COVID goes down we don't want hospitals at 100+% for a number of reasons.
Sure, but we aren't there. I don't think anyone wants people to die, either from Covid or a cratered economy. And I understand that medical providers are generally in the camp of no deaths ever, but thet aren't really exposed to real world economics.
Same was said by many before Memorial Day long weekend and there was no sell off.
With the ridiculous number of overnight gap ups we've had the last few months, it's almost crazy NOT to roll the dice overnight/long-weekend. Just more time for "well this wasn't as bad as we initially thought in March" news.
With the ridiculous number of overnight gap ups we've had the last few months, it's almost crazy NOT to roll the dice overnight/long-weekend. Just more time for "well this wasn't as bad as we initially thought in March" news.
I think we rally a bit this week. dump off will be next week.
The day after tvix goes away.
Markets up today
Today's "Fingers Crossed" moment brought to you by me, and my 15 wide 3050 SPX fly I have on today. $.20 to take $15.
***If this post is on Business and Investing, take it with a grain of salt. I am wrong way more than I am right (but I am less wrong than I used to be) and if you follow me you will be too.***
B&I Key:
ETH - Extended Trading Hours --- RTH - Regular Trading Hours
ORH - Opening Range (1st 30min) High --- ORL - Opening Range Low
R1, R2, R3 - Resistance 1, 2, or 3 --- S1, S2, S3 - Support 1, 2 or 3
B&I Key:
ETH - Extended Trading Hours --- RTH - Regular Trading Hours
ORH - Opening Range (1st 30min) High --- ORL - Opening Range Low
R1, R2, R3 - Resistance 1, 2, or 3 --- S1, S2, S3 - Support 1, 2 or 3
Featured Stories
See All
35:53
4h ago
2.5k
42:45
1h ago
789
The Good Ol' Days: Reminiscing on Texas A&M's magical spring of '89
by David Sandhop
12:52
3h ago
1.3k
Houston Memorial's Jackson Appel thriving in first season as an Aggie
by Ryan Brauninger
8:02
2h ago
849
Depth of A&M lineup impresses even slugger Braden Montgomery
by Ryan Brauninger
Dave Grohl
No panic Edgerrin and other Aggies, Madubuike was drafted #71
in Billy Liucci's TexAgs Premium
104
Chandlauch
JACKSON APPEL - Aggie Baseball - Would You be Surprised???
in Billy Liucci's TexAgs Premium
86
1/2 Man 1/2 Amazing
No panic Edgerrin and other Aggies, Madubuike was drafted #71
in Billy Liucci's TexAgs Premium
69
agsalaska
JACKSON APPEL - Aggie Baseball - Would You be Surprised???
in Billy Liucci's TexAgs Premium
66
Rudyjax
JACKSON APPEL - Aggie Baseball - Would You be Surprised???
in Billy Liucci's TexAgs Premium
47