I think that stat doesn't take into account how many more traders who used to throw money into the markets have opted for limited loss through options.

whats the deal with boeing ? most analysts are bearish on it. i dont see how seeing its the largest defense contractor in the US. Yea they are in bad state right now but i dont see all the fuss

" Brilliant post! I'm just getting into spreads, ran a spread on BA on Friday b/c I didn't want to fork over big bucks for the calls. The spread smashed it and I banked a 4x trade on it

Interesting on the SPY credit spread in the money, so you're basically using it like a put? if SPY dips when you sell it, it's a money maker"

A couple points, a) you can use call or put spreads in any direction; a bull call spread is the same (and the same price) as a bull put spread (both profit the same on a rise in the underlying), and b) with a credit spread, you wouldn't be "selling it back", you'd be buying it back.

Example; sell a 305/310 call spread. Collect $3.50. Note, the max value of the spread is $5. You have to put up $1.50 in order to collect that premium (it goes into a restricted cash holding in your account). If the stock stays above 310 at expiration, you will have to use all 100% of that cash (of which, $3.50 was credited to you, and $1.50 of your cash was required to be in holding). Hence, you lost the $1.50. But, if the stock closes at 304, both options are worthless, and you can just let it expire (or buy the spread for $0.01) and the next day after expiration (or immediately after you buy the spread "back") the "restricted" cash is no longer restricted, its just yours, i.e. you made $3.50 (or $3.49).

Ultimately, its no different than if you had purchased a 310/305 put spread. It would have cost you $1.50 (the same $1.50 you had to place in restricted cash) and the seller would have collected that $1.50 and $3.50 of the sellers own cash plus your cash payment would have been placed under restriction in the sellers account.

Do y'all think the S&P 500 falls back down to below 3000 or do you think we are going to stay above and not have a large dip again soon?

BREwmaster said:

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12thMan86 said:

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12thMan86 said:

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FishrCoAg said:

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12thMan86 said:

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McInnis 03 said:

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So y'all asked yesterday if I started to hedge a fall with long put butterflies

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remember, these don't max out unless the center strike is hit right at the end of the day on expiration.

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I feel like I'm missing something. Isn't the risk 20.30 if it closes at 2880 at expiration? NVM. I suck at math today

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Nope your risk is simply the debit paid. The best way to play butterflies, especially ones that are not wide ( the wider the wings, the better chance you have to catch more...but they are more expensive) is to sell them when you've made 3 to 10 times your money and not try to "pin" or max out the trade. I've f'd myself a few times doing that.

The other thing that gets you is getting to the puts you sold, the center strike. If we woke up on Monday and the market was at 2900, you'd think " damn I just hit it". But in reality those center strike puts you sold would still have a lot of life. The trade would make money, probably 4x. But cashing out at 1.20 is not cashing out at 20 bucks.

The way I like to play flies is short term. I put on a 2960/3000/3040 for 1.40 for Friday next week. Will it hit? Prolly not. But if we get back to the mean (21 ema) next week between Wednesday and Friday, that will be a nice hit. I had a zoom fly that I put on Monday for 2.30. 220-240-260. 240 was the expected move per TOS. YESTERDAY when zoom was 225 I sold it for 5.30. I could have waited and chance that I get more today, but that would have not been a good call. I took the 2.5x and moved on. ZM closed around 210 I think. If it's back up to 23o or so tomorrow I'll be pissed but I just Take base hits.

Some of the simpler trading guys like to use butterfly's at earnings. Say for example it's Thursday. Apple announces after hours. It's currently trading at 225. And the expected move is 15 bucks, you just don't know which way. Remember, the expected move is based on current volatility, and IS NOT an exact science.
So why not create a 230-240-250 butterfly that expires tomorrow? You want to see those center strikes lose value fast? Do a one day trade! That trade would probably cost a buck and you could make 10. If you wake up the next day and apple is at 240, the fly is probably worth 4 or 5 bucks and you have to decide if you want to hold on to it until the afternoon to make the full 10. I'll usually watch them and tr to get as much as I can, but I don't get greedy. Like with Zoom yesterday. Most of those big ballers on simpler will buy 5 or 10. Then you can leg out to get some free trades working. I have pinned a few in the last 30 mins and it's glorious. I'm a gambling mo fo and sometimes a guy with 30 yrs experience that teaches will use his insight to guess a direction on a mon, wed, or Friday afternoon on SPX. They usually are 8 to 10:1. Sometimes they hit, sometimes they don't. So you place the butterfly trade at 2 ish pm and you can let it CASH SETTLE. You don't have to close anything and it doesn't count as a day trade! With the volatility he usually does them 15-20 wide and will place the sold strikes where there is high open interest on both the put and call side at a certain number. Nice round numbers are common. Like 3000. It's crazy how it works.

Y'all should look into selling credit spreads and buying back for less. Takes advantage of theta decay and volatility. I typically do them at or slightly in the money and while the usually pay 1:1 or 3:2, my hit rate is pretty solid. Using that same Apple example, if you think Apple is going to 235 by next Friday. Sell the 225/220 credit spread for 2.60. That money goes in your account, and your risk is the spread with minus your credit, or 2.40. Instead of selling a naked put, you are selling a put and buying a cheaper put for insurance. If you want to make more, widen the spread. As long as Apple closes above 225 at expiration, you keep the credit. I usually buy them back when I've made 80% of the max profit, or in this case around .50. So sell for 2.60, buy back for .50. All day long. Did it on crowdstrike today. Sold 90/85 PCS ON Monday for 2.80. Bought back today for .40. 2.40 overall profit. However If APPLE is at 235, you just let it expire worthless and keep it ALL!

Think the market is going to drop but don't want to pay up for SPY PUTS? Look at what a call credit spread costs that's ITM. You can probably sell a 305/310 ccs for 3 or 3.50 right now. Total guess I'm not in front of computer. But your max risk is 1.50. 4 of those would put up to 1400 bucks in your pocket for $600 risk. If the market keeps going up, maybe you have to buy it back for MORE than you paid, but you'd won't get smoked like owning a straight up put that's going against you. I see a lot of guys buy way OTM calls and outs on here. It works great with it moves your way, but if it doesn't, you can get smokes in a hurry. Theta positive if you can!

I was going to answer that in two sentences and now look at this crap!

Sorry for the rant. I love this stuff! Good night and Gig em!


found several minor mistakes. Vodka!

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Brilliant post! I'm just getting into spreads, ran a spread on BA on Friday b/c I didn't want to fork over big bucks for the calls. The spread smashed it and I banked a 4x trade on it

Interesting on the SPY credit spread in the money, so you're basically using it like a put? if SPY dips when you sell it, it's a money maker.

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Correct

jamaggie06 said:

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" Brilliant post! I'm just getting into spreads, ran a spread on BA on Friday b/c I didn't want to fork over big bucks for the calls. The spread smashed it and I banked a 4x trade on it

Interesting on the SPY credit spread in the money, so you're basically using it like a put? if SPY dips when you sell it, it's a money maker"

A couple points, a) you can use call or put spreads in any direction; a bull call spread is the same (and the same price) as a bull put spread (both profit the same on a rise in the underlying), and b) with a credit spread, you wouldn't be "selling it back", you'd be buying it back.

Example; sell a 305/310 call spread. Collect $3.50. Note, the max value of the spread is $5. You have to put up $1.50 in order to collect that premium (it goes into a restricted cash holding in your account). If the stock stays above 310 at expiration, you will have to use all 100% of that cash (of which, $3.50 was credited to you, and $1.50 of your cash was required to be in holding). Hence, you lost the $1.50. But, if the stock closes at 304, both options are worthless, and you can just let it expire (or buy the spread for $0.01) and the next day after expiration (or immediately after you buy the spread "back") the "restricted" cash is no longer restricted, its just yours, i.e. you made $3.50 (or $3.49).

Ultimately, its no different than if you had purchased a 310/305 put spread. It would have cost you $1.50 (the same $1.50 you had to place in restricted cash) and the seller would have collected that $1.50 and $3.50 of the sellers own cash plus your cash payment would have been placed under restriction in the sellers account.

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If you sell an ATM CREDIT SPREAD, and stock doesn't move, you keep the credit. If you do a debit spread and the stock doesn't move, you lost 1.50

Great explanation guys, thank you!

$AZN and $GILD merger talk rumor. SIAP

https://www.google.com/amp/s/mobile.reuters.com/article/amp/idUSKBN23E09O

Huh.. shouldnt have cut bait on my AZN calls.

WYNN
101.61

Doubled in 2 months. Amazing when that happens!

Advice: I have 3 x 26 June NVDA $380C. Bought when it was on a roll and before releasing great earnings report. Should have cut bait as it started trending down after earnings. Premium Now down 60%.

Best to cut or is there an option strategy I can do to limit the loss ($2300 right now). Don't see It rising $40+ in two weeks. It's not TESLA.

Might be becoming self aware and answered my own question.

Yeah figured. Should have set that stop loss.

Thanks!

IrishTxAggie said:

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Charlie Kelley said:

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$AZN and $GILD merger talk rumor. SIAP

https://www.google.com/amp/s/mobile.reuters.com/article/amp/idUSKBN23E09O

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Good thing my calls were all 6/5 and expired worthless.

In sitting on 6/19s that are down ~50%. Hopefully this news will get me back to manageable.

AgEng06 said:

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In sitting on 6/19s that are down ~50%. Hopefully this news will get me back to manageable.

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I had 6/5's and still have 6/19's... would like the 6/19's to also get manageable to make the loss not as bad

Square Pair said:

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Advice: I have 3 x 26 June NVDA $380C. Bought when it was on a roll and before releasing great earnings report. Should have cut bait as it started trending down after earnings. Premium Now down 60%.

Best to cut or is there an option strategy I can do to limit the loss ($2300 right now). Don't see It rising $40+ in two weeks. It's not TESLA.

Might be becoming self aware and answered my own question.

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I'm not doing this to steer you, but I'm saying this as someone holding 6/19 380/390/400 butterflies. The group of traders I keep up with all are extremely bullish on NVDA, they pinned 400 butterflies for 6/19. They're also selling 350/342.5 put credit spreads for jun12 as late as two days ago.

Who knows what's coming but I'm in for the attempt

Square Pair said:

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Advice: I have 3 x 26 June NVDA $380C. Bought when it was on a roll and before releasing great earnings report. Should have cut bait as it started trending down after earnings. Premium Now down 60%.

Best to cut or is there an option strategy I can do to limit the loss ($2300 right now). Don't see It rising $40+ in two weeks. It's not TESLA.

Might be becoming self aware and answered my own question.

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Thinking out loud here. Holding 3 380's, could you sell 3 390s for the same day to recoup some money, giving you a max gain because you're creating a debit spread but if the stock flies you can capture some profit?

Is this insanity?

you've got to know when to fold em and take the L sometimes. It feels to me like the 380C is a long shot at this point, but who knows around the time the fed speaks. That might be your best opportunity to exit. I might personally try 350P or 340P depending on opening tomorrow with a further out expiration depending on how much they cost. You could also buy the stock and write 360 calls, but that's not going to be a cheap move at $356/share and the premium probably won't recoup your losses.

Unrelated. But I'm waiting for your thief in the night to dump this bullishness out of the market. Do you think it's going to be around Q2 GDP report?

Also, did anyone see John Carter post a Tesla squeeze play on friday at Noon May 29th, saying it had a lot of energy to the upside @ $820. Then Monday came around and it closed at $898? That's insane.

Aggies1322 said:

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Also, did anyone see John Carter post a Tesla squeeze play on friday at Noon May 29th, saying it had a lot of energy to the upside @ $820. Then Monday came around and it closed at $898? That's insane.

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that is a 10% increase in stock price.
SpaceX (part of Tesla) had a successful launch of spaceship.

If SpaceX thing fails Tesla drops, if it succeeds it goes up. Not exactly Nostradamus.

Aggies1322 said:

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Unrelated. But I'm waiting for your thief in the night to dump this bullishness out of the market. Do you think it's going to be around Q2 GDP report?

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If only I knew. I want to say a catalyst is required to your point. Q2 results will hopefully throw some cold water on things. I feel like we are certainly in exuberance, heading to euphoria. It just requires big money to say this is a good time to sell.

3200+ ES Futures. Big round number tomorrow?

Thanks to whomever posted the Oasis Petroleum heads up. Picked up a handful of 1.00c expire Jan 2021 for cheap. Lets hope it rides up a bit

I missed the Friday rally and am planning on putting some cash to work tomorrow. So that means everyone should prepare for a free fall

oldarmy1 said:

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3200+ ES Futures. Big round number tomorrow?

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3300?

texagbeliever said:

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Aggies1322 said:

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Also, did anyone see John Carter post a Tesla squeeze play on friday at Noon May 29th, saying it had a lot of energy to the upside @ $820. Then Monday came around and it closed at $898? That's insane.

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that is a 10% increase in stock price.
SpaceX (part of Tesla) had a successful launch of spaceship.

If SpaceX thing fails Tesla drops, if it succeeds it goes up. Not exactly Nostradamus.

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I forgot about that launch. Regardless, be was basing it off of his TTM Squeeze indicator. Which pointed to a move up. But good reminder on that.

I'd like to see this on a percentage scale. The DOW and S&P were at completely different levels back then.

10 points then =/= 10 points today

Ranger222 said:

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Looking over some things tonight, I would be cautious about being overexposed to short-term swing trades or options right now.

We are pretty extended from the 20 day moving average, and I feel like the rise in new COVID cases will definitely be in the news by mid-week which could spook the markets and inject some volatility that would fuel profit taking and a pull back.

Going to try my best and not enter new trades unless its a day trade but I'm looking to be playing more defense than offense as we get into the mid-week.

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Do you feel the same way about OG industry? Supply seems to be only decreasing and demand increasing. I dont know that those stocks will hurt if oil futures keep ticking up.

I'm hoping to get into CNX before it makes its move upwards. Looks like a great setup for a breakout.