Stock Market Intraday chat: Feb 6th - 10th - Page 5

I don't agree. It depends on how deep the options you are looking at and what the expected move will be. There are too many variable to control. Theta (which is less since its deep in the money, Delta, Vega and overall implied Volatility.  

I've thought about doing something like this before but in my situation it didn't look like it was going to work out.

The loss from a stock dropping offset any premiums collected. I think you'll just have to get out the calculator and guestimate the earnings but if I was choosing I'd want something that's expected to remain flat or rise to sell calls on
 

Quote:

Originally Posted by Philosuffer 

I am welcoming your thoughts on the following strategy!

 

Imagine you have an IRA account where you can only do covered calls but no other options or short positions. As you all know, to write (sell) a covered call, I must first own the stock.

 

Now, I found a stock that is going to tank big time. I am fairly confident about it and wants to buy puts on it. However, I can only do covered calls.

My thought process is to buy this stock (knowing that this will go down) and then sell deep in the money covered calls and get higher premiums. When the stock falls big and becomes out of the money by the expiry date, those gains from the covered calls would more than offset the losses from the stock price decline.

 

However, I feel the current low VIX makes this kind of play unattractive and also deep in in the money calls would exactly have the difference between current price and strike price as the premium.

 

Appreciate your feedback!

 

 

Deep itm call option isn't going to have much premium.

Markets going to rally near the close on short covering in fears of a Greek solution tonight? Or will longs take profit and cause a sell off incase there is default? hmmm

I think you both are right! low time premiums and low volatility, would almost make the gains offset the losses, making it not a worthy play.
 

Thanks Oldy. I cant do collars as there is only one account and it can only do covered calls.

Quote:

Originally Posted by UWouldLose 

I've thought about doing something like this before but in my situation it didn't look like it was going to work out.

 

The loss from a stock dropping offset any premiums collected. I think you'll just have to get out the calculator and guestimate the earnings but if I was choosing I'd want something that's expected to remain flat or rise to sell calls on
 

 

I've tried this before in the Canadian version of an IRA account.  It didn't work so well for me, I find you're better off waiting and buying at a lower price.   The longer timeframe you sell your calls the less value they lose when the stock drops.  If you sell front months then there's no premium in the way ITM calls.

If you find a stock w/ high option premiums that you like, buy it and sell front month or weeklies on it.  I've found that to be the best.

 

Quote:

Originally Posted by Philosuffer 

I am welcoming your thoughts on the following strategy!

 

Imagine you have an IRA account where you can only do covered calls but no other options or short positions. As you all know, to write (sell) a covered call, I must first own the stock.

 

Now, I found a stock that is going to tank big time. I am fairly confident about it and wants to buy puts on it. However, I can only do covered calls.

My thought process is to buy this stock (knowing that this will go down) and then sell deep in the money covered calls and get higher premiums. When the stock falls big and becomes out of the money by the expiry date, those gains from the covered calls would more than offset the losses from the stock price decline.

 

However, I feel the current low VIX makes this kind of play unattractive and also deep in in the money calls would exactly have the difference between current price and strike price as the premium.

 

Appreciate your feedback!

 

 

15 million volume in UNG

Quote:

Originally Posted by Philosuffer 

I think you both are right! low time premiums and low volatility, would almost make the gains offset the losses, making it not a worthy play.
 

Thanks Oldy. I cant do collars as there is only one account and it can only do covered calls.

 

Stick to what you know and are best at. (probably get stick for not saying spread your wings etc etc.. but bug&&er it I just trade for money.. being the resident HSM parasite)

If its that new to you paper trade it for a bit first.

Totally torn on this market at the moment, people I respect are saying both up and down. Still mindfull of that *golden Cross* SJE pointed out and I got slapped down for commenting on saying it may play out.

I sleep better with my hedge on the common and calls I have.  Good luck Philo.

Quiet here today.... zzzzzzzzzzzzzzzzz

Quote:

Originally Posted by rando 

had to take a long lunch today to fight the boredom.

was it a liquid lunch?

you can always depend on tvix to fall off a cliff EOD

Any idea as to what is causing this continuing decline in volume?  Maybe a general disbelief that the markets shouldn't be at these levels?  If so, wouldn't that cause some selling pressure?
 

Quote:

Originally Posted by rando 

Not including Christmas week and day after Thanksgiving (always lighter volume), today looks like it should be SPY's weakest volume since late April. Weak vol across the board. Major, major snoozefest, BVSN woke up again to ream shorts, I'm not getting involved but it's the only thing keeping me awake... had to take a long lunch today to fight the boredom.

Quiet before the storm?(JK)

Day off today,

Trying to feel out risk toleration ATM. No clear signs.

Bonds making a week attempt to gain ground. Gold and oil down, but not too bad. Lumber speculation saying that economy and housing likely to improve.

Euro took a run at 1.30 last night whilst I slept. Now she's making a run at resistance. My flag is looking pretty tattered. Now it resembles a pennant that's been in the wind too long. Still within daily channel at 1.3130. A break above 1.32 wound signal risk is OK and there will be partying and dancing in the streets of Europe.

My conspiracy about the Euro weekly trend almost always opposite from the first day open might still pan out.

Judging from the way today is closing, I would say 1340 not a bad place to start a base for the week.

Still watching my numerology conspiracy theory just for fun.

If I don't reset the count then Wed. is day 5 (pop day) or if i reset after the last pop then Fri is day 5.

I know nothing to put any faith in, just curious to watch.

Charts on these subjects in my log.

ya and... .... which do you think it is?
 

Quote:

Originally Posted by hermanpu 

Markets going to rally near the close on short covering in fears of a Greek solution tonight? Or will longs take profit and cause a sell off incase there is default? hmmm

I thought this was well thought out and worth digging up.
 

Quote:

Originally Posted by RagingBull 

Any idea as to what is causing this continuing decline in volume?  Maybe a general disbelief that the markets shouldn't be at these levels?  If so, wouldn't that cause some selling pressure?
 

 

From an earlier post of Rando:

http://www.hotstockmarket.com/t/189855/stock-market-daily-chat-jan-30th-feb-3rd/420#post_2824835

Quote:

Originally Posted by RetireYoung 

you can always depend on tvix to fall off a cliff EOD

I was noticing the same thing... almost a sure thing to buy XIV the last hour for a quick scalp

Seems to be "Smart money" is buying

Just testing......specially for the new ones....it doesnt matter the time frame, but in case its 1d chart. Company name is hidden on purpose...

How would you trade this setup? Long, short, now later, stoploss (yes/no)...etc?

I will open a new thread in Group for training. I will allways hide names, to avoid bias analysis. Hope you enjoy it!

im thinking lack of volume caused buy less and less ppl chasing this market higher, and the reason why we not dropping is cuz those that bought at lower levels haven't been taking profit yet.. basically the only ppl playing this market are those that are long, and there aren't many of them
 

Quote:

Originally Posted by RagingBull 

Any idea as to what is causing this continuing decline in volume?  Maybe a general disbelief that the markets shouldn't be at these levels?  If so, wouldn't that cause some selling pressure?