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FJ43
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In reply to djmeen95 • 9:36p, 1/30/21
djmeen95 said:
FJ43 said:
CPDAggie10 said:
I feel like I sell $5 puts on WWR every time it has a down day. Feb, March, April, May. Give me them all!

Agree. Sold a bunch of a May $5 puts late last week on the dip. Too much fun.


Ok. So still getting confused on calls and puts.

In the example above, let's see if I get this... you own WWR stock?

As the price drops, you sell $5 PUTS on a portion of your holdings. Which means someone pays you a fee (which you pocket immediately) for the right to sell some of your shares at a $5 price point?

Which means they then have to also pay you $5/share for those stocks? Or they give you back the stocks they sell?

There's where I get lost.

Because if the cost of the shares never hits $5, then.... what happens?

You keep the premium and everyone walks away and you keep the shares?

Sigh - I'm pretty sure I got that wrong.

Really struggling with this concept.


The put side is the opposite of the call side. Think of it this way.

Whomever pays the premium holds the cards. They have the right to buy the stock (long calls) or sell the stock (force the sale puts side) at the agreed strike (price) of the contract.

When you buy calls you pay the premium so you have the right to those shares if you choose to exercise them. The guy you paid for that right keeps the premium.

When you sell calls the guy pays you for the premium and right to buy your shares and you keep the premium.

The put terminology is opposite. When you sell puts you are receiving the premium but the obligation to buy the shares. The buyer bought that obligation from you and may or may not hold you to it. You keep the premium whether he does or doesn't.

When you are the buyer of the put you are paying the premium to the seller and locking them into the obligation to buy your shares at a price.

Selling puts is a way to get premium now and either keep it if the stock price rises (they likely won't force the sale to you) or you buy the stock at the price of the strike. The key here is if you have to buy them your happy to since the strike price less the premium you've been paid is an attractive entry point.

Does that help?

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Talon2DSO
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In reply to FJ43 • 9:41p, 1/30/21
AG
FJ43 said:
djmeen95 said:
FJ43 said:
CPDAggie10 said:
I feel like I sell $5 puts on WWR every time it has a down day. Feb, March, April, May. Give me them all!

Agree. Sold a bunch of a May $5 puts late last week on the dip. Too much fun.


Ok. So still getting confused on calls and puts.

In the example above, let's see if I get this... you own WWR stock?

As the price drops, you sell $5 PUTS on a portion of your holdings. Which means someone pays you a fee (which you pocket immediately) for the right to sell some of your shares at a $5 price point?

Which means they then have to also pay you $5/share for those stocks? Or they give you back the stocks they sell?

There's where I get lost.

Because if the cost of the shares never hits $5, then.... what happens?

You keep the premium and everyone walks away and you keep the shares?

Sigh - I'm pretty sure I got that wrong.

Really struggling with this concept.


The put side is the opposite of the call side. Think of it this way.

Whomever pays the premium holds the cards. They have the right to buy the stock (long calls) or sell the stock (force the sale puts side) at the agreed strike (price) of the contract.

When you buy calls you pay the premium so you have the right to those shares if you choose to exercise them. The guy you paid for that right keeps the premium.

When you sell calls the guy pays you for the premium and right to buy your shares and you keep the premium.

The put terminology is opposite. When you sell puts you are receiving the premium but the obligation to buy the shares. The buyer bought that obligation from you and may or may not hold you to it. You keep the premium whether he does or doesn't.

When you are the buyer of the put you are paying the premium to the seller and locking them into the obligation to buy your shares at a price.

Selling puts is a way to get premium now and either keep it if the stock price rises (they likely won't force the sale to you) or you buy the stock at the price of the strike. The key here is if you have to buy them your happy to since the strike price less the premium you've been paid is an attractive entry point.

Does that help?



As an additional example, I have 300 SNDL shares so that allows me to either SELL TO OPEN covered calls and pocket the premium or SELL TO OPEN puts?
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Colt98
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9:43p, 1/30/21
AG
And if you sell the put you have to have the cash in your acct on hold to buy the stock at the strike price. So when you sell the $5 mar wwr put for 1.10. you get $110 in your acct. your broker will hold $500 of your money during that time in case you are put those shares at $5. If the stock is 4.98 at the end of that time, you get put the shares for $500 and you keep the $1.10. So you are in the stock for $3.90
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CPDAggie10
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9:44p, 1/30/21
AG
Also keep in mind you can always buy back the sold calls or puts to lock in a premium gain.

I'd actually say that the majority of the calls and puts I've sold, I rarely let them expire. I feel like I end up buying them back or roll them out/up to keep grinding on the trade. This might be the wrong strategy. Someone call me out if I'm wrong.
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Mr President Elect
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In reply to Talon2DSO • 9:44p, 1/30/21
AG
sell to open calls, yes.

sell to open puts, no -- this is a move to acquire additional shares, so your account will probably deduct the cash as collateral for the cost of those shares if the put expires ITM.
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Bob Knights Paper Hands
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In reply to FJ43 • 9:49p, 1/30/21
FJ43 said:


Is this one of 'their' next targets? Read the responses including OA's.

Damnit. **** all of you, okay I'll be up at 3:30 am on Monday to buy more shares or calls. *******s. I will likely hold off on selling calls through Monday afternoon to see if this runs a bit first and lif it does ook at some combination of selling shares and OTM calls to go net free.
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McInnis 03
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9:51p, 1/30/21
AG
3 ways to purchase stock:
1) buy shares outright (simple, no strings attached)
2) buy calls (strings attached, you paid extra for the shares in premium, normally only makes sense above strike and with premium added in)
3) sell puts (strings attached, you got premium for the guarantee that you're buying if it's below your strike)

3 ways to sell stock:
1) sell shares outright (simple, no strings attached)
2) buy puts (strings attached, you paid extra for the selling ability in premium, normally only makes sense when shares below strike and with premium subtracted)
3) sell calls (strings attached, you got premium for the guarantee that you're selling if it's above your strike)

It took me awhile to get a mental grip on calls and puts, both long and short
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FJ43
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In reply to Talon2DSO • 9:55p, 1/30/21
Talon2DSO said:
FJ43 said:
djmeen95 said:
FJ43 said:
CPDAggie10 said:
I feel like I sell $5 puts on WWR every time it has a down day. Feb, March, April, May. Give me them all!

Agree. Sold a bunch of a May $5 puts late last week on the dip. Too much fun.


Ok. So still getting confused on calls and puts.

In the example above, let's see if I get this... you own WWR stock?

As the price drops, you sell $5 PUTS on a portion of your holdings. Which means someone pays you a fee (which you pocket immediately) for the right to sell some of your shares at a $5 price point?

Which means they then have to also pay you $5/share for those stocks? Or they give you back the stocks they sell?

There's where I get lost.

Because if the cost of the shares never hits $5, then.... what happens?

You keep the premium and everyone walks away and you keep the shares?

Sigh - I'm pretty sure I got that wrong.

Really struggling with this concept.


The put side is the opposite of the call side. Think of it this way.

Whomever pays the premium holds the cards. They have the right to buy the stock (long calls) or sell the stock (force the sale puts side) at the agreed strike (price) of the contract.

When you buy calls you pay the premium so you have the right to those shares if you choose to exercise them. The guy you paid for that right keeps the premium.

When you sell calls the guy pays you for the premium and right to buy your shares and you keep the premium.

The put terminology is opposite. When you sell puts you are receiving the premium but the obligation to buy the shares. The buyer bought that obligation from you and may or may not hold you to it. You keep the premium whether he does or doesn't.

When you are the buyer of the put you are paying the premium to the seller and locking them into the obligation to buy your shares at a price.

Selling puts is a way to get premium now and either keep it if the stock price rises (they likely won't force the sale to you) or you buy the stock at the price of the strike. The key here is if you have to buy them your happy to since the strike price less the premium you've been paid is an attractive entry point.

Does that help?



As an additional example, I have 300 SNDL shares so that allows me to either SELL TO OPEN covered calls and pocket the premium or SELL TO OPEN puts?

The guys above provided some good points. Think this.

Calls Side

You sell the rights to your shares.
You buy the rights to their shares.

Both can be reversed by completing the opposite.

Puts side

You sell someone your commitment/obligation to buy the shares
You buy someone's obligation to buy your shares.

Both can be reversed by completing the opposite.
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FJ43
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In reply to Bob Knights Paper Hands • 9:56p, 1/30/21
FJ43
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In reply to Bob Knights Paper Hands • 9:58p, 1/30/21
Bob Knights Liver said:
FJ43 said:


Is this one of 'their' next targets? Read the responses including OA's.

Damnit. **** all of you, okay I'll be up at 3:30 am on Monday to buy more shares or calls. *******s. I will likely hold off on selling calls through Monday afternoon to see if this runs a bit first and lif it does ook at some combination of selling shares and OTM calls to go net free.

Early bird gets the worm!
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FJ43
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10:13p, 1/30/21
OA's options seminar will be valuable to anyone who can attend when that day comes. I know I need to learn this to a much deeper understanding across the board.

In my opinion it is one of the key elements to build wealth and protect it.
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Ornithopter
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In reply to Bob Knights Paper Hands • 10:14p, 1/30/21
AG
What brokerage lets you buy then?

Fidelity extended hours starts at 7am EST.
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Ukraine Gas Expert
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In reply to FJ43 • 10:15p, 1/30/21
AG
When's the next one?
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Guitarsoup
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10:16p, 1/30/21
AG
If I buy a call at $5, it is 100 shares at $5. I have to have $500 sitting in my account? Can you set it to just sell at market price so you never see the shares if you want?
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cisgenderedAggie
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In reply to Guitarsoup • 10:19p, 1/30/21
I think it has to post to your account before you can sell it.
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FJ43
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In reply to Ukraine Gas Expert • 10:23p, 1/30/21
Ukraine Gas Expert said:
When's the next one?

He mentioned doing one more for new folks that didn't get in on the one then would be planning an advanced seminar and options. No date I'm aware of yet.
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Guitarsoup
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In reply to cisgenderedAggie • 10:24p, 1/30/21
AG
cisgenderedAggie said:
I think it has to post to your account before you can sell it.
Note to self, don't buy options on Amazon.
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Guitarsoup
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10:25p, 1/30/21
AG
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FJ43
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In reply to Ornithopter • 10:26p, 1/30/21
DubFalls said:
What brokerage lets you buy then?

Fidelity extended hours starts at 7am EST.

I know IBKR Pro allows 4am EST - 8pm EST. Not sure what other brokers provide that ability actually. Would be interested for others if their allow. I know TDA/TOS doesn't other than select instruments.
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gig em 02
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In reply to Guitarsoup • 10:31p, 1/30/21
Guitarsoup said:
If I buy a call at $5, it is 100 shares at $5. I have to have $500 sitting in my account? Can you set it to just sell at market price so you never see the shares if you want?
No, only if you sell a put.

If you buy a call you don't have to exercise the call (buy the shares) even if the options are in the money. So you don't have to have the cash on hand.

If you sell a put then you are obligated to buy the shares if the price of the stock is below the strike price. Because you have to buy the stock (in theory) the bank will hold enough cash to do that.
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cisgenderedAggie
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In reply to Guitarsoup • 10:31p, 1/30/21
Guitarsoup said:
cisgenderedAggie said:
I think it has to post to your account before you can sell it.
Note to self, don't trade naked options on Amazon and hold ITM through expiration.


I think mostly just don't want to be caught holding the bag for 100 share lots unless you has opulence. Early exercise terrifies me enough to not **** with something like Amazon though.

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McInnis 03
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In reply to Guitarsoup • 10:37p, 1/30/21
AG
Guitarsoup said:
If I buy a call at $5, it is 100 shares at $5. I have to have $500 sitting in my account? Can you set it to just sell at market price so you never see the shares if you want?


You don't have to have cash to secure calls. You can sell calls you've bought literally 1 second after buying them. I do it often LoL
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Lt. Joe Bookman
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In reply to $30,000 Millionaire • 10:42p, 1/30/21
AG
$30,000 Millionaire said:
$NKE. Clear rejection of 89 EMA. I really wish I had bought this in the hole. This has a confirmed reversal and it is oversold. Be on the lookout for second goalpost on volume. I think this looks great if it can clear $136. It is following the market, so be mindful of that. Mean reversion of 138 is a reasonable target if you enter now. If this gets momentum, target $147. If you're doing calls, plan a couple months out. $131 stop.



Thank you so much. I got several shares when it was down at 132 but looking at options now.

Was looking at the 120 Feb call, but the volatile market has me a little timid. The 120 call has a break even of 135.5.

May play the 120 March call with a 136.5 break even.

Really appreciate an extra set of eyes on the chart.
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CPDAggie10
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In reply to Guitarsoup • 10:50p, 1/30/21
AG
Guitarsoup said:
If I buy a call at $5, it is 100 shares at $5. I have to have $500 sitting in my account? Can you set it to just sell at market price so you never see the shares if you want?
I'd recommend playing a few options trades on TOS with fake money or even real cash that you are willing to lose. Follow a couple of the trades that are posted on here and you will begin to learn how option prices move and how premium decay works. Always go net free when the opportunity presents itself....It takes the emotion out of a trade/stock.

I have learned more knowledge from actually getting my feet wet on trades, making mistakes and learning how the markets work than I ever did from google or any forum...although this forum is pretty damn good.
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CPDAggie10
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11:07p, 1/30/21
AG
Okay. I've told myself I'm going to attempt to bring better content to this thread other than me spewing garbage about rippers and blindly following you experts on trades.

Here is my first chart posted:

$POWW

Ammo sales. They have given guidance for tremendous revenue sales growth in Q4...and I think with current administration ammo sales could continue to be through the roof.

Potential goalpost trade based on the daily chart. I have initiated a very small position and sold $5 puts on it this past week, and am looking to potentially add more soon.

Thoughts?

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$30,000 Millionaire
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In reply to Lt. Joe Bookman • 11:14p, 1/30/21
AG
Lt. Joe Bookman said:
$30,000 Millionaire said:
$NKE. Clear rejection of 89 EMA. I really wish I had bought this in the hole. This has a confirmed reversal and it is oversold. Be on the lookout for second goalpost on volume. I think this looks great if it can clear $136. It is following the market, so be mindful of that. Mean reversion of 138 is a reasonable target if you enter now. If this gets momentum, target $147. If you're doing calls, plan a couple months out. $131 stop.



Thank you so much. I got several shares when it was down at 132 but looking at options now.

Was looking at the 120 Feb call, but the volatile market has me a little timid. The 120 call has a break even of 135.5.

May play the 120 March call with a 136.5 break even.

Really appreciate an extra set of eyes on the chart.


Buy the 120 and sell the 142
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djmeen95
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11:14p, 1/30/21
AG
Thanks guys for the explanations on calls and puts. That REALLY helped - especially the explanation around 3 ways to buy stocks and 3 ways to sell stocks. My head was spinning and reading the explanations on various sites only was getting me more twisted up.

Also helpful was "whoever pays the premium makes the decision".

Now I can think through some of the prior plays on this site and rewatch the last 30 mins of OA's session when it gets uploaded and hopefully follow it better.

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Ukraine Gas Expert
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11:16p, 1/30/21
AG
FYI for the newbies like me, this is a fantastic video in addition to all the great content they folks here are providing.

It's very basic, so forgive me if people already know, but the guy does a great job of explaining, showing examples, and speaking in simple terms.

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Lt. Joe Bookman
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In reply to $30,000 Millionaire • 11:23p, 1/30/21
AG
$30,000 Millionaire said:
Lt. Joe Bookman said:
$30,000 Millionaire said:
$NKE. Clear rejection of 89 EMA. I really wish I had bought this in the hole. This has a confirmed reversal and it is oversold. Be on the lookout for second goalpost on volume. I think this looks great if it can clear $136. It is following the market, so be mindful of that. Mean reversion of 138 is a reasonable target if you enter now. If this gets momentum, target $147. If you're doing calls, plan a couple months out. $131 stop.



Thank you so much. I got several shares when it was down at 132 but looking at options now.

Was looking at the 120 Feb call, but the volatile market has me a little timid. The 120 call has a break even of 135.5.

May play the 120 March call with a 136.5 break even.

Really appreciate an extra set of eyes on the chart.


Buy the 120 and sell the 142


For March?

I really like that strategy. Can I sell a call without owning 100 shares? Or does me owning the 120 call cover that?

Also, I'm trading on ToS. It only does increments of 5 for NKE. Is that normal? Or am I not seeing them all. I guess I'd sell the 145 rather than the 140 as I'm pretty bullish on it.

Edit. I guess I can do it as an option leg like so?

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leoj
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In reply to Ukraine Gas Expert • 11:23p, 1/30/21
AG
Ukraine Gas Expert said:
FYI for the newbies like me, this is a fantastic video in addition to all the great content they folks here are providing.

It's very basic, so forgive me if people already know, but the guy does a great job of explaining, showing examples, and speaking in simple terms.



Tastytrade has a ton of videos going over all of the option setups as well.
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gig em 02
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In reply to CPDAggie10 • 11:46p, 1/30/21
CPDAggie10 said:
Okay. I've told myself I'm going to attempt to bring better content to this thread other than me spewing garbage about rippers and blindly following you experts on trades.

Here is my first chart posted:

$POWW

Ammo sales. They have given guidance for tremendous revenue sales growth in Q4...and I think with current administration ammo sales could continue to be through the roof.

Potential goalpost trade based on the daily chart. I have initiated a very small position and sold $5 puts on it this past week, and am looking to potentially add more soon.

Thoughts?

If yall could check my understanding - would this have been a good mass accumulation stock with what Im guessing was a darvas box followed by the famous quadruple top breakout and into the model T?

I think long term their issue will be supply, but that may not be a concern until Q2. I'm going to see what kind of options are available because I imagine their earnings will be astronomical.
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Glitch
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12:04a, 1/31/21
AG
TDA has online courses with quizzes at the end. It forced me to do the math, and that helped a bunch.
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frankm01
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12:47a, 1/31/21
I found this handbook on charting on the internet last week. It gives some explanations and examples of some of the basic terms many chartists and technical analysts use, such as reversals, consolidation, moving averages, RSI, etc.

This is NOT the Handbook of Technical Analysis by Jobman that is recommended on page 1 of this thread, (which incidentally appears to be out of stock everywhere) but it at least helps understand some of the terms used.

Hope it helps some.

MxudjQevBU.pdf (elearnmarkets.com)



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Charismatic Megafauna
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4:03a, 1/31/21
AG
Guitar and meen (and others probably):
It helps me to think about what obligation you have when you enter into an option contract. In most cases if you buy/hold the contract (call or put) you now have the right to do something (purchase the shares or sell the shares) but not the obligation, you can usually choose not to exercise that right so you don't have to have cash or shares on hand to buy options. If you have sold/written that contract (and receive money in exchange, i.e. premium), you are now obligated to satisfy the terms of the contract if the holder chooses to exercise (which they can do at any time). Of course there are exceptions but in general that helped me get my head around it.
Edit: i see that fj aleady posted this and dj reiterated it...
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Charismatic Megafauna
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4:06a, 1/31/21
AG
Lol @ all y'all on here at 11pm on a Saturday (and me at 4am sun) learning how to make money! If we'd have done this in college instead of drinking on northgate we'd all be rich by now!
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