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Forum » *Official* Options trading thread: Why Alpha/Beta when you can Theta?
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Thread: *Official* Options trading thread: Why Alpha/Beta when you can Theta?

post 1634907773 03-29-2021, 10:13 AM
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#601
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Originally Posted By chino3⏩
yeah the premiums on PLTR are trash right now, which is crazy considering IV is at +70%. I just opened 5/21 cc's for $30. CB is $29... I want to ditch these shares (have a bunch in my IRA), but nothing around my CB makes it worth while until further out... You're in a good position though. Just look at it like this, if you don't get exercised, you are collecting 1% in premiums/month. If you rinse/repeat, that would be a 12% annual ROI. Just imagine consistently farming 12% each year. Not glamorous, but it's solid returns.
Thanks for the advice/knowledge bro! Pltr is a long term hold for me, but figured I would try to generate a little bit of ROI while I hold it. Like you said, it’s not glamorous, but I’m not a glamorous investor (majority of my retail account is in index funds).
post 1634917803 03-29-2021, 12:24 PM
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#602
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Originally Posted By chino3⏩
yeah the premiums on PLTR are trash right now, which is crazy considering IV is at +70%. I just opened 5/21 cc's for $30. CB is $29... I want to ditch these shares (have a bunch in my IRA), but nothing around my CB makes it worth while until further out... You're in a good position though. Just look at it like this, if you don't get exercised, you are collecting 1% in premiums/month. If you rinse/repeat, that would be a 12% annual ROI. Just imagine consistently farming 12% each year. Not glamorous, but it's solid returns.
how sad is it I get similar premiums theta farming T, which is what you guys were making fun of me for getting such a low premium lol, does this mean pltr is a boomer stonk now?
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post 1634921323 03-29-2021, 01:05 PM
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#603
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Originally Posted By SipNPiz⏩
how sad is it I get similar premiums theta farming T, which is what you guys were making fun of me for getting such a low premium lol, does this mean pltr is a boomer stonk now?
Problem is we're selling so far above the current trading price, so premiums are chit lol. Icouldbe aggressive and sell weeklies at say $25, and if it looks like they will expire ITM, I could roll, but this stock has the ability to sky rocket (and tank) super quickly, so it's hard to play. That said, I was doing this with RKT back in the day. My CB was $27, and I was selling calls at $22 with next to no concern lol.
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post 1634925193 03-29-2021, 01:59 PM
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EXPR is my current baby theta maker. In at around $4, and the $5 calls are still selling for $0.50 - $1.00. So not costing much to hold and making >10% every 30-45 days is alright.
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post 1634957753 03-29-2021, 08:48 PM
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STO
TSLA Apr01 665C x2
TSLA Apr01 680C x2
PLTR May07 27C x10
TWTR Apr16 70C

Collecting 2100 in premium if all goes well. Last weeks short calls expired worthless, collecting 1600.
post 1634986343 03-30-2021, 08:31 AM
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Originally Posted By TugOfPeace⏩
Can anyone explain this:

I bought puts @ $1.49 cost basis a while back.

At open today, the price of those puts somehow increased to $5.00.

I set a limit order (STC) for $5.00 and when it didnt go through, I did $4.99. Still no luck.

So after a few seconds or a minute, the price fell back down to $.97 which is more in line with what the stock is trading at.
Was $5.00 the bid, ask or last price?
post 1634989273 03-30-2021, 09:04 AM
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#607
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Originally Posted By TugOfPeace⏩
I was in a hurry but I believe the bid price was $0, ask was $10
lol that's quite the spread.

Also, options are full on retarded at open. I know you use TDA, so I recommend using Think or Swim to at the very least review your order vs trading price. As much as I love TDA, its real time price information is dog chit (at least on the phone app), but ToS app will show you what it REALLY is trading at. I should just use ToS altogether, but I find it soooooo much less intuitive than TDA. I know it's just a matter oflearningthat interface, but I don't wanna lol

Also, LULU has implied movement (earnings after close today) of 6.5%. Even if you don't want to play with options, I would say start a position at this price and at the very least sell a CC for $325 or higher for this week or next. I still see this hitting $400 EoY
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post 1635008963 03-30-2021, 12:50 PM
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#608
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Originally Posted By TugOfPeace⏩
Can anyone explain this:

I bought puts @ $1.49 cost basis a while back.

At open today, the price of those puts somehow increased to $5.00.

I set a limit order (STC) for $5.00 and when it didnt go through, I did $4.99. Still no luck.

So after a few seconds or a minute, the price fell back down to $.97 which is more in line with what the stock is trading at.
don't play options that have low volume/oi.

you will have hard time getting fill.
Originally Posted By chino3⏩
Also, LULU has implied movement (earnings after close today) of 6.5%. Even if you don't want to play with options, I would say start a position at this price and at the very least sell a CC for $325 or higher for this week or next. I still see this hitting $400 EoY
last 5 earnings on LULU weren't hot tbh I expect it will do nothing.
option flow fairly weak. think mm crushes it keeping it pinned around $320ish

Jan 11, 2021 BMO -1.0%
Dec 10, 2020 AMC -6.7%
Sep 8, 2020 AMC -7.4%
Jun 11, 2020 AMC -3.8%
Mar 26, 2020 AMC -6.0%
post 1635012843 03-30-2021, 01:41 PM
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#609
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Originally Posted By TugOfPeace⏩
Can anyone explain this:

I bought puts @ $1.49 cost basis a while back.

At open today, the price of those puts somehow increased to $5.00.

I set a limit order (STC) for $5.00 and when it didnt go through, I did $4.99. Still no luck.

So after a few seconds or a minute, the price fell back down to $.97 which is more in line with what the stock is trading at.
Originally Posted By TugOfPeace⏩
I was in a hurry but I believe the bid price was $0, ask was $10
Most of the times options prices will be marked at the mid point of the bid/ask spread. Options prices can be weird at open because there is no after hours/before market trading, so people are often putting in orders to guess where the market will be, or sometimes just wild numbers just in case some one fills it.

In this case, it looks like someone put out a wild sell order for $10 and there weren't any buy orders open yet, so the mid price was $5.00. Prices probably normalized once more orders started coming through.
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post 1635015953 03-30-2021, 02:21 PM
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#610
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Originally Posted By Carbonfibre⏩
don't



last 5 earnings on LULU weren't hot tbh I expect it will do nothing.
option flow fairly weak. think mm crushes it keeping it pinned around $320ish

Jan 11, 2021 BMO -1.0%
Dec 10, 2020 AMC -6.7%
Sep 8, 2020 AMC -7.4%
Jun 11, 2020 AMC -3.8%
Mar 26, 2020 AMC -6.0%
Their earnings are great, their movement following earnings are not. But premiums are good to sell aggressive covered calls on and also shares are cheap enough to get in. Like I said this isn’t about buying options it’s selling calls and building a position. This will see $400
Originally Posted By TugOfPeace⏩
So was it an erroneous price? I’m going to keep my order open and see what happens in the next few days, I wonder if my order will go through next time if this price is seen.

Makes sense what you're saying though, that's what I figured since options can't be traded premarket/after hours.
Did you check it out on TOS?
"It won't get better, just different."
post 1635018553 03-30-2021, 02:52 PM
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#611
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Originally Posted By chino3⏩
Their earnings are great, their movement following earnings are not. But premiums are good to sell aggressive covered calls on and also shares are cheap enough to get in. Like I said this isn’t about buying options it’s selling calls and building a position. This will see $400
I know, just hate touching anything related to earnings since it just get pinned close to its price so MM kills call/put holders.

From chart perspective the absolute bottom of Lulu is $285 it bounced off that level. So doubt it will see that level any time soon again.

Retest of high from September was rejected once so there is potential it could go try $390 again.

Its getting close to 50 day moving average just below it (still $20 off 200 MA).

RSI is rising again so maybe bump up will follow in months time.
post 1635031413 03-30-2021, 05:50 PM
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Originally Posted By chino3⏩
Spoiler!

BTO
TSLA
1/21/22
$326c @ $309 x4

Goal is to line up weekly CC's 4 weeks in advance, as one closes, I open another and keep it going and going. Price target is purely based on $1k/contract in premium, so in premium farming alone looking for $4k/month. This is what I did

STO
TSLA
4/1 - $642.50cc @ $10.00
4/9 - $682.50cc @ $10.10
4/16 - $705cc @ $10.5
4/23 - $735cc @ $10.8


Mini update on this. With this great rally, I decided to close the 4/1 $642.5cc for a cool $100 profit lol, but rolled out to a May $800 exp/strike @ $15.

Also, went potentially aggressive with my 200 shares and:

STO
TSLA
4/9
$700c @ $5 x2

Looking to ditch these shares, but my CB is $678 on those, so needed a higher strike which means lower premium. I'm thinking that the ideal situation would be to sit on the 4 leaps, and not hold shares (at least at that high of a price).

So I am set through April, and first week of May. If next week my $682.50pmcc and $700cc's DON'T get called away, I will set up another leg for 5/21 for the pmcc, but will write weeklies @ $700 or so for the actual shares until called away.

Also have some chit going on with LULU that may need some management by 4/9 and 4/16, but we shall see.
"It won't get better, just different."
post 1635082123 03-31-2021, 10:41 AM
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#613
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well dang, quite the surprising activity last night and today.

I had some super aggressive covered and naked calls on LULU that thought I would have to set up strangles to manage, but was able to close them out for a couple hundred bucks in profit. I have a 4/16 $310csp @ $16, and would happily add at a cost basis that low.

My TSLA PMCC's are redddddd af, but that's life. This was either going to be a theta farming move if it stayed low/flat, but if it hit my strikes, I planned to sell. 4/9 $682.50 looking vulnerable, but will be a $7k play if I have to close out. That will help with part of my tax bill smh...

Awesome seeing PLTR coming to life finally. Closed out my 4/1 CC for $.01, just to get it off the books. Demo day coming up in 2 weeks, so will probably wait to open another CC until then and see what action is like.
"It won't get better, just different."
post 1635105583 03-31-2021, 03:31 PM
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#614
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Originally Posted By TugOfPeace⏩
Just bought MARA 4/16 $49P. Massive run the past week, if we aren’t in a complete clown world market this should pull back to mid $40s atleast
clown world how?

not saying it won't work out but Mara broke its previous resistance.

of course how crypto goes so does Mara so you will have time to exit on pricey put.
post 1635110963 03-31-2021, 04:34 PM
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#615
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Not option related but thoughts on trading precious metals...?!
- Keep the misc great again

- Watch my poo flush while holding the plunger to make sure I don't flood the bathroom crew.

- You can be REALCLOUT too VIA the REALCLOUT text GENERATOR sponsored BY miscmathematician SRS

Click here ----------------> https://js.do/caffeinatedlogic/50858



The world is YOURS boyos.
post 1635123133 03-31-2021, 07:29 PM
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#616
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chino you in?



ufc going public.

https://www.sec.gov/Archives/edgar/d.../d67085ds1.htm
post 1635464003 04-05-2021, 08:26 AM
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#617
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Gonna sit on my hands this Monday and wait til mid week. Hoping for a mega move in TSLA based on positive delivery figures. Close above 700 today or tomorrow then Ill look for a very fast spike to 800.
post 1635583793 04-06-2021, 04:41 PM
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#618
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did call spread on Paypal April 23


http://opcalc.com/sV6


thinking of doing one on AMD as well waiting for it to go above $84




I am completely baffled at RKT.
post 1635584923 04-06-2021, 04:55 PM
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Originally Posted By Carbonfibre⏩
I am completely baffled at RKT.
What do you mean?

Currently holding
STO
RKT
4/16
$22.89p @ 2.19 x20

5/21
$22p @ $2.36 x20



I closed out a couple CSPs today

DHI with just $.05 left, and VZ with $.04 left. I was really hoping to get assigned, but damn they just up and left me! I would've bought outright, but I had too much tied up at the time. oh well.

Rolled out my TSLA $682.5csp and am already up 17%. Das it. Still have my 4/9 $700csp x2 that I hope gets exercised (and will just continue to do PMCC's with my LEAPs). Worst case, just keep being aggressive with weeklies.
"It won't get better, just different."
post 1635587083 04-06-2021, 05:23 PM
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#620
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Originally Posted By chino3⏩
What do you mean?

Currently holding
STO
RKT
4/16
$22.89p @ 2.19 x20

5/21
$22p @ $2.36 x20



I closed out a couple CSPs today

DHI with just $.05 left, and VZ with $.04 left. I was really hoping to get assigned, but damn they just up and left me! I would've bought outright, but I had too much tied up at the time. oh well.

Rolled out my TSLA $682.5csp and am already up 17%. Das it. Still have my 4/9 $700csp x2 that I hope gets exercised (and will just continue to do PMCC's with my LEAPs). Worst case, just keep being aggressive with weeklies.
Chart is mind blowing.

Trading range $20-22 since its debut. (Ignoring two pumps were just wsb effect (gamma squeeze)))

You won't find another setup like this on company with huge market cap.

Short volume again is starting to pick up. It seems like easiest target ever for them to short.

post 1635589743 04-06-2021, 05:57 PM
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Originally Posted By Carbonfibre⏩
Chart is mind blowing.

Trading range $20-22 since its debut. (Ignoring two pumps were just wsb effect (gamma squeeze)))

You won't find another setup like this on company with huge market cap.

Short volume again is starting to pick up. It seems like easiest target ever for them to short.

gotcha. Thinking about adding a long position, or just being more aggressive with CSP strikes.

Also, got approved for Mark to Market. Will be interdasting to see how this affects me in the long run. What's crazy is that my AXP original CB was $78, but now reflects as $120.91 (price it was at the end of the year). My long holds will be all wonky should I hold them through the year. I may just reserve my little IRA for long holds. I don't know the fine details of MTM, aside from:

- Gains and losses are calculated at the end of the year, on all holdings, as if I sold them (so no need for tax loss harvesting, cost basis will be adjusted next year)
- Gains are treated as earned income, not capital gains.
"It won't get better, just different."
post 1635590693 04-06-2021, 06:10 PM
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#622
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Originally Posted By chino3⏩
gotcha. Thinking about adding a long position, or just being more aggressive with CSP strikes.

Also, got approved for Mark to Market. Will be interdasting to see how this affects me in the long run. What's crazy is that my AXP original CB was $78, but now reflects as $120.91 (price it was at the end of the year). My long holds will be all wonky should I hold them through the year. I may just reserve my little IRA for long holds. I don't know the fine details of MTM, aside from:

- Gains and losses are calculated at the end of the year, on all holdings, as if I sold them (so no need for tax loss harvesting, cost basis will be adjusted next year)
- Gains are treated as earned income, not capital gains.
Not sure if that can be done here in Canada.

My taxes this year was piece of cake (I panicked a bit in January cause last year got into options way too much),

Basically software auto pulled the data from CRA (IRS) site and it calculated gains converted to CDN and that was it. Was bit pissed I even bothered with tax accountant.

flat 50% capital tax on gains. check sucked but meh such is life.
post 1635591413 04-06-2021, 06:21 PM
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#623
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Originally Posted By Carbonfibre⏩
Not sure if that can be done here in Canada.

My taxes this year was piece of cake (I panicked a bit in January cause last year got into options way too much),

Basically software auto pulled the data from CRA (IRS) site and it calculated gains converted to CDN and that was it. Was bit pissed I even bothered with tax accountant.

flat 50% capital tax on gains. check sucked but meh such is life.
As soon as I got my first rental property I got on board with an accountant. This year when he saw my activity he suggested going mark to market. I have a disgusting tax bill so far, but this move should save me at least 20%.
"It won't get better, just different."
post 1635628973 04-07-2021, 07:50 AM
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#624
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Originally Posted By Carbonfibre⏩
Not sure if that can be done here in Canada.

My taxes this year was piece of cake (I panicked a bit in January cause last year got into options way too much),

Basically software auto pulled the data from CRA (IRS) site and it calculated gains converted to CDN and that was it. Was bit pissed I even bothered with tax accountant.

flat 50% capital tax on gains.check sucked but meh such is life.
Is that real life? Holy hell. Fuk that nonsense.
Originally Posted By chino3⏩
As soon as I got my first rental property I got on board with an accountant. This year when he saw my activity he suggested going mark to market. I have a disgusting tax bill so far, but this move should save me at least 20%.
I guess I must be misunderstanding something. Wouldn't mark to market hurt you? Normally you aren't taxed on unrealized gains, and capital gains are already taxed at regular income unless they're long term (held over a year) in which case it's a lower rate. So if I'm understanding correctly, you would be giving up the option to ever pay that lower tax amount on a long term position since every year you'd be paying the tax on unrealized gains at the higher normal income rate.
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post 1635629413 04-07-2021, 07:59 AM
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#625
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Originally Posted By SpeedCheeser⏩
Is that real life? Holy hell. Fuk that nonsense.



I guess I must be misunderstanding something. Wouldn't mark to market hurt you? Normally you aren't taxed on unrealized gains, and capital gains are already taxed at regular income unless they're long term (held over a year) in which case it's a lower rate. So if I'm understanding correctly, you would be giving up the option to ever pay that lower tax amount on a long term position since every year you'd be paying the tax on unrealized gains at the higher normal income rate.
MTM hurts the long holder but is beneficial for the trader. Being taxed on unrealized gains sucks but my long holds will be minimal. Honestly the only time I’d see myself being LONG something in my trading account is if I get assigned and end up super under water. At which point if it hasn’t recovered by EoY I get the “loss” benefit without having to TLH.

Cap gains when held for under a year is at the MAX tax rate whereas earned income is substantially less assuming I’m not literal ceo 10k/day.

My IRA is where I’ll set up my long holds to set and forget, with occasional covered calls along the way.
"It won't get better, just different."
post 1635632833 04-07-2021, 08:46 AM
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Originally Posted By chino3⏩
MTM hurts the long holder but is beneficial for the trader. Being taxed on unrealized gains sucks but my long holds will be minimal. Honestly the only time I’d see myself being LONG something in my trading account is if I get assigned and end up super under water. At which point if it hasn’t recovered by EoY I get the “loss” benefit without having to TLH.

Cap gains when held for under a year is at the MAX tax ratewhereas earned income is substantially less assuming I’m not literal ceo 10k/day.

My IRA is where I’ll set up my long holds to set and forget, with occasional covered calls along the way.
Short term capital gains are taxed as normal income. It's subject to the same progressive tax that any other income is, which for most people is just considered to be at their marginal rate. It sounds like MTM will also be taxed as if it's normal income as well. That part isn't going to change. And yeah, I guess if you're still holding a dud at the end of the year those unrealized losses will offset whatever gains you have in other positions, but that seems like it would be a wash in the long run. Maybe a slight advantage since you recognize all losses at short term rates rather than being able to offset. But I don't know, on the surface it sounds like it should hurt more than help to me.
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post 1635634133 04-07-2021, 09:02 AM
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Originally Posted By SpeedCheeser⏩
Short term capital gains are taxed as normal income. It's subject to the same progressive tax that any other income is, which for most people is just considered to be at their marginal rate. It sounds like MTM will also be taxed as if it's normal income as well. That part isn't going to change. And yeah, I guess if you're still holding a dud at the end of the year those unrealized losses will offset whatever gains you have in other positions, but that seems like it would be a wash in the long run. Maybe a slight advantage since you recognize all losses at short term rates rather than being able to offset. But I don't know, on the surface it sounds like it should hurt more than help to me.
It goes a little deeper than that. From my accountant:
This would allow you to treat your trading like a business activity and deduct your expenses directly against your “net profit/loss” of your trading. This would also allow us to get favorable tax treatment on the gains by allowing us to tax 60% of the gain as long term and 40% as short term
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post 1635635433 04-07-2021, 09:16 AM
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Originally Posted By chino3⏩
It goes a little deeper than that. From my accountant:
Yeah, I saw you can also deduct related expenses, but I have to imagine in reality those wind up being really low if any. I'm not understanding where the 60/40 is coming from since everything is marked to market at year end and taxed as normal income. Unless he's talking about your entire portfolio of multiple accounts and holdings. Even then I'm still not seeing how marking everything to short term can turn out to be beneficial.

I'm not a tax accountant, so probably take his word, but I'm just trying to wrap my head around why this would be beneficial.
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post 1635637823 04-07-2021, 09:42 AM
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Originally Posted By SpeedCheeser⏩
Yeah, I saw you can also deduct related expenses, but I have to imagine in reality those wind up being really low if any. I'm not understanding where the 60/40 is coming from since everything is marked to market at year end and taxed as normal income. Unless he's talking about your entire portfolio of multiple accounts and holdings. Even then I'm still not seeing how marking everything to short term can turn out to be beneficial.

I'm not a tax accountant, so probably take his word, but I'm just trying to wrap my head around why this would be beneficial.
26 U.S. Code § 1256 - Section 1256 contracts marked to market
https://www.law.cornell.edu/uscode/text/26/1256

I don't know how or why, but it's there. (regarding the 60/40 tax rates).
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post 1635640633 04-07-2021, 10:14 AM
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Originally Posted By chino3⏩
26 U.S. Code § 1256 - Section 1256 contracts marked to market
https://www.law.cornell.edu/uscode/text/26/1256

I don't know how or why, but it's there. (regarding the 60/40 tax rates).
That's strange, but it also looks like it only applies to futures and non equity options for the most part. Aren't your trades mostly in options on individual stocks/equities? This chit always seems so unnecessarily complicated.
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