|
Post by bernythedolt on Jul 7, 2021 11:08:53 GMT
3rd July...
7th July...
That was $800 well spent on a valuable lesson... IF you learn from it.
BUT, Chasing down his losses is the very worst thing a gambler can do. Casinos love people like that.
I would advise to pause for a moment, take stock, and take investment advice. Perhaps better still, hand it over to a handful of expert fund managers to do the work for you.
|
|
|
Post by Deleted on Jul 7, 2021 12:39:29 GMT
The ingredient you seem to be missing cwah , which a few people have pointed out, is volatility. This is not just an esoteric term when it comes to options. It has a precise meaning. Option prices and volatility go hand in hand. So the reason you received a high premium for shorting Tesla options is that it is a volatile stock, hence expensive options, hence high premium for selling those options. If you then go and soil yourself and panic when Tesla acts in a fashion that is, well, volatile... it defeats the whole purpose, does it not?
|
|
cwah
Member of DD Central
Posts: 949
Likes: 468
|
Post by cwah on Jul 7, 2021 12:51:16 GMT
Its a good point. I was thinking to swap anyway as it feels it would be less risky.
Its just it dropped so fast yesterday I didn't have a chance to change before the drop.
Now hopefully I can break even in the next 2 weeks if tesla share recovers or stay at current level.
|
|
registerme
Member of DD Central
Posts: 6,233
Likes: 6,038
|
Post by registerme on Jul 7, 2021 12:58:45 GMT
cwah, do you, mathematically, understand how to price an option? Do you have a model that you use to price and risk manage your positions? Or do you make use of a 3rd party tool to do this for you? Please, please, say YES to all of those questions! If you say no, please, please stop what you're doing. There's an old poker adage - "If you look round the table and can't see who the fish is... you're the fish". At the moment the whole of the rest of the market understands how to price options, and I am far from convinced that you do. That makes you the fish .
|
|
cwah
Member of DD Central
Posts: 949
Likes: 468
|
Post by cwah on Jul 7, 2021 13:07:59 GMT
cwah, do you, mathematically, understand how to price an option? Do you have a model that you use to price and risk manage your positions? Or do you make use of a 3rd party tool to do this for you? Please, please, say YES to all of those questions! If you say no, please, please stop what you're doing. There's an old poker adage - "If you look round the table and can't see who the fish is... you're the fish". At the moment the whole of the rest of the market understands how to price options, and I am far from convinced that you do. That makes you the fish . There is an option simulation tool in IB helping to know what happens should the option drop 10% 20% ect. I just figured I may have less risk to both own the share AND sell a covered call on it. What I had previously was just a short. It's very safe because of its 30% discount to maturity. However, selling a short gives a huge amount of interest upfront but nothing while waiting... If I own the share and rent it (PMCC), I can continuously earn money while owning the share. It's a more bullish position with a possibility to break even within 6 months if all goes to plan. Because Tesla is overpriced, it does feels more appropriate to earn more interest while owning it to offset the potential drop that may follow up.
|
|
|
Post by bernythedolt on Jul 8, 2021 0:43:04 GMT
|
|
cwah
Member of DD Central
Posts: 949
Likes: 468
|
Post by cwah on Jul 8, 2021 9:09:57 GMT
I already regret trading it. Tesla dropped 10% I bought from 690 to 629 now... I can t sell at loss either.
|
|
jonno
Member of DD Central
nil satis nisi optimum
Posts: 2,745
Likes: 3,138
|
Post by jonno on Jul 8, 2021 9:35:54 GMT
I already regret trading it. Tesla dropped 10% I bought from 690 to 629 now... I can t sell at loss either. Providing you can sustain this loss, this might prove the most valuable lesson you've learned. The stock market is a great way to "get rich slowly" but getting involved in overly complicated,apparent can't lose, become a millionaire overnight schemes are a minefield unless you really,really know what you are doing. Listen to the advice on here, it could save you a fortune.
|
|
alanh
Posts: 556
Likes: 560
|
Post by alanh on Jul 8, 2021 10:41:11 GMT
I admire your honesty cwah. Although you say you "can't sell at a loss", do you know what your maximum loss exposure is using your current strategy?
|
|
cwah
Member of DD Central
Posts: 949
Likes: 468
|
Post by cwah on Jul 8, 2021 11:14:00 GMT
I admire your honesty cwah. Although you say you "can't sell at a loss", do you know what your maximum loss exposure is using your current strategy? What does maximum loss exposure mean? I can't lose any money tbh. So the max loss is £0
|
|
|
Post by Deleted on Jul 8, 2021 11:20:42 GMT
anyone else seen Ground Hog day?
:-)
|
|
alanh
Posts: 556
Likes: 560
|
Post by alanh on Jul 8, 2021 11:26:13 GMT
I admire your honesty cwah. Although you say you "can't sell at a loss", do you know what your maximum loss exposure is using your current strategy? What does maximum loss exposure mean? I can't lose any money tbh. So the max loss is £0 What options have you bought and sold exactly and at what price? Its not clear from your previous post or I would be able to work it out.
|
|
cwah
Member of DD Central
Posts: 949
Likes: 468
|
Post by cwah on Jul 8, 2021 11:41:54 GMT
I first sold the 690 put and got $200.
Then I swapped it to a PMCC to collect premium. So I bought it back at $205 and realised £623 loss (probably around $900)
Then did the following PMCC: - Bought a Dec17 21' 550 call for $159.75 - Sold the Jul16 21' 690 call for $9.35
I must be around £2k losses so far. I was thinking to keep selling 690 call at further expiration date to avoid losing more if the stock bounce back.
However I'd collect lower and lower premium as the stock tank lower....
|
|
cwah
Member of DD Central
Posts: 949
Likes: 468
|
Post by cwah on Jul 8, 2021 11:42:51 GMT
|
|
drgonzo
Member of DD Central
Posts: 82
Likes: 95
|
Post by drgonzo on Jul 8, 2021 11:57:43 GMT
|
|