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Yeah - trying to figure out when to hit the sell. I would like $1.50 - probably won't get it, but ready just in case.
Loves them options!
Heads up - from a poster on another board who usually has pretty good intel...
The US ratings agency is poised to announce later on Monday that it is putting Germany, France, the Netherlands, Austria, Finland, and Luxembourg on “creditwatch negative.
Bot SPY Dec 9 $125 put for .99.
Excellent article - he's a very good writer compared to many analysts. Thanks Roy.
Looking at FSLR puts for next week.
Prices of solar panels plummeting, glut on the market, companies going under. FSLR artificially propped up right now, IMO. Conference call on Dec 16th, new CEO, dropping PE.
Looking at Dec 16 $40 puts. Any comments?
TIA
Whew - that's comforting to know. Thanks.
Thanks Roy - another really informative post.
What I was trying to understand when I used the term exercise the put was what would have happened if I had not been able to sell to close the put on Friday. From what the E-trade guy was saying, I would have been on the hook for a bunch of money not in my account. This was news to me!
That's what I'm trying to better understand so that I don't do something catastrophic.
Since I had 2 put contracts at roughly 1.25 near the close of the day, if I had not been able to sell, would I have been on the hook for 200 shares of RIMM at market price?
Thanks again...
Thanks DotNet - that was a very valuable reminder.
I hadn't really thought through the risks of the trade not closing before the end of the day. Now I understand better why they closed me out, even though I was sitting right there with my finger on the trigger and had a sell order at $1.30.
On that point, suppose you are trading in the last 10 minutes or so on a Friday (2:50pm my time, 3:50 market time). Are you always able to sell to close a put at the bid? Is there anything that would keep me from selling to close, thus exercising the put?
Thanks in advance to everyone.
Actually, I don't trade on margin - I didn't have cash to cover it. Didn't know I was supposed to. Oops... Oh well, got away with it.
I was really happy with this today. One of my first successful trades, even if a small one. Can't wait to try again!
I got out by accident. E-trade automatically exercised me at 1.25 because if I had not sold to close when it expired, I didn't have the margin to cover it. Then they charged me a $45 brokerage fee for closing me out.
We talked it out and they refunded it. As long as they know I am at the switch, it will be OK. You learn something everyday..........
IHUB has been screwy all day.
Thanks again Roy - everyone on this board is just awesome. Have a nice weekend!
Sold RIMM Dec 2 $18 puts for 1.25. In at .90 = .+.35.
Woo Hoo! Thanks Roy, Newly, Beer and Smartone for posting your trades and letting me watch for the last few weeks. I have learned a lot from all of you!
I'm watching closely - have my finger on the sell button. I love options!!!!!!!
So if everything else held steady, the put value (RIMM Dec2 $18) should increase in value through the end of day? TIA.
Good one Roy! Inspiring.
RIMM got the Cramer Kiss of Death!
One minute - shrugged it off. Jim Cramer's endorsement may be not so valuable these days.
Dang! Aren't they always wrong?
So if I understand you correctly, you would not expect any additional gain solely based on theta decay, right?
Question for Roy on RIMM.
If RIMM stays somewhat flat for the rest of the day, will the option put premium continue to increase based on Theta decay?
TIA
I'm thinking there will be some day flipping, but probably people will exit before EOD - not want to hold RIMM over the weekend.
Just a hunch...
I only have one trade left for this week. This is it.
I'm going for the Theta rot factor today Roy. Let me know if you see any warning signs for me. Still very new at this.
Thanks
Oops - $18
Bot RIMM Dec 2 $18 puts @ .90
Thanks - that was a clear explanation. I will play around with it.
Yes, please clarify!
I.E. a 50 and 80 day?
What is the 5 x 8 cross? Thanks
Thanks Roy!
I made my first real money (small) trade today after studying your methods for a few weeks.
Did a NFLX put at .71, out at 1.13. I am thrilled! Thank you for all that you do for this board.
Regards,
Jane
Phaseshift: I highly recommend an introductory class (online) by TradeSmartU. They generally offer scholarships for their first class - it is excellent.
Another idea Phaseshift - open a practice account with OptionsExpress and make practice trades for awhile. Then watch what happens to the trades over a period of time.
In particular, make some practice trades on paper, then watch the stock options change with the underlying stock price. Watch what happens to
- option price
- Implied volatility
- Delta
- Theta
This helped me more than all the theoretical discussions. Just watch it for several hours to see how these variables change with the share price during a market session.
Question for Roy...
Hi Roy - Happy Thanksgiving. Hope that you and the family have a relaxing and meaningful holiday.
My question: What happens to Theta decay when OPEX occurs on half-day markets? Does it just stop early, or is it even more accelerated? Thanks in advance.
Will be watching the board tomorrow to learn more about holiday trading. If I don't see you then, see ya on Monday.
Regards - Jane
Don't recall meeting your daughter, but it was a long time ago. I'll have to dig out my old yearbook....
Someone needs to call the Rally Monkey today. Market is really grumpy.
Small world - graduated from Westbury in '71, then moved away. Now I am in Garden Oaks.
Summers are getting awful here, but winters are just fine!
Thanks Roy,
Couple of other questions:
- Do you take MAXPAIN into account in your Friday OPEX trades?
- Towards the end of the day, do you have problems exiting a trade? In other words, does dropping liquidity ever cause you to get stuck?
I am just amazed by this. Will be watching and learning!
More questions for Roy...
Hi Roy. I am still analyzing and digesting your brilliant AMZN put play on Friday.
Just to confirm my understanding, was it your strategy to find a declining stock, buy puts on Friday OPEX, and then let the clock run to benefit from the rising Delta?
If so, is it necessary to close out a play like that, or can you just let it run out through the OPEX and expire?
Thanks again for sharing your knowledge! - Jane.
Trading today was truly amazing to watch.
I knew that OPEX could be a profitable day for experienced traders, but didn't really understand it until I wasted most of the day watching and tracking what was going on.
I will be reading up this weekend on this some more. Just now starting to understand the Greeks by watching them over a period of time today.
Thanks again for posting your trades and such good info. This is a really great board for people who want to learn options.
Have a great weekend.
Whew! Awesome exercise Roy. Here's what I observed.
As we got closer to close, Delta was increasing, especially when SP dropped. Theta dropped steadily, as did Gamma.
Also observed that the options price increased over time for approx the same SP:
SP
197.56 at 2:45 was 2.36
197.50 at 2:53 was 2.55
197.45 at 2:55 was 2.57
As SP dropped closer to close, the options price rose dramatically.
Big question I've got - if there had been sudden surge in price, would the reversal in price been very dramatic as well?
This was a great exercise - I'm going to watch OPEX for a few more weeks to try to figure out how to trade it. Any suggestions are welcome.
OK - I'd doing it.
Thanks Roy,
This was a hugely educational trade to watch today. Thanks for your explanation.
I was closely watching how the Greeks moved against SP changes and time decay on OPEX.
Thanks for posting information that helps so many people. I always learn a lot from you and your trades.
I'm watching this play Roy to learn from you. Pretty amazing.
Question: What was the SP when you placed the trade, and why did you choose 123?
Thanks in advance. You are an amazing trader.
Noob question - why do some stocks have Nov options, and others don't? thanks.
For example, AAPL has 'em, AMZN doesn't. ??
Thanks Roy - I have taken a couple of courses on TA, practiced charting, and then tracked AAPL options daily for about a month before placing my first trade.
My first trade was yesterday - did very well.
Today, I think my emotions got the best of me. It gapped up this morning, and my rational mind should have said "wait - it will gap back down to try to fill the gap". But I was too eager to trade.
I am going to hang in the trade for another day or so and re-evaluate. If I lose a bit, will be a slightly costly, but not ruinous lesson to think before I hit the buy button.
Thanks to everyone for sharing what you know. I will be paying closer attention!