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Can you post the link where Teddi suggested BIIB? I somehow missed this alert. I want to be looking out next some an alert like this comes out
Yes. Thanks Caleb
Hi Caleb. Glad to see you’re doing so well. One thing I wanted some clarification on. Regarding your trades guidelines; in one paragraph you write “with about 8% protection” and in the next paragraph it’s “10% away from the current price”. Are these descriptions of the same thing?
Thanks
DavidThe risk for assignement is higher the in the last week.
Didn’t you get assigned on weekly naked call? If you sell sold a monthly naked call, you wouldn’t have to repair it… The underlying would have dropped below the strike price.
market makers are smart they know people like to hold to till expiration. Thats why the odds for assignement are higher the last few days.
Test it out… sell weeklys see how many times your NP need repair.
also some stock are volatile say if drops 7% in a day? well thats a lot of decay you could close early.
then next day it bounce 5% you re-sell it.
Depends on the stocks you trade, how they move etc.
>It would help me to understand how my thinking is wrong, and how a longer duration position works in the trader’s favor rather than against him.
You can close early at 50% profit. Its more advantageous to close early sometimes if you have enough profit.
Your thinking is that you NEED to hold to EXPIRY? You don’t.
II.
you haven’t factored in TA. which greatly increase your put selling odds.
I know there are some doing these automatic set and forget weekly PUTs, but those are the VETs that know how to rescue their positions.I personally hate rescues, so i use TA to time my put selling.
You should look at teddi articles on using TA signals to time put selling:
https://www.fullyinformed.com/v-stock-vis-put-selling-macd-histogram/
Thats the first one i learned, so many years ago… amazing how far i come.
2. Just try experimenting the your DTE (days till expire) try 2 weeks, 3week and closing early see how you feel.
maybe paper trade it first. Paper trading is useful, because your thought process might be wrong? options get complicated. So by paper trading you can figure out if your thesis is correct.
(there also the greeks- delta, gamma, theta— however, i think it just complicates things when you starting out.. You only really need to focus on delta for the momement).
Keep track of your delta your selling at… its roughly the odds of getting assigned.I am selling puts on super volatile stocks and i rarely get assigned unless i want.
>It would help me to understand how my thinking is wrong.
I wouldn’t say wrong. I think your strategy can be improved. Depends on stock too, how volatile it is.
I selling at DTE>14 but i am still collecting premium every week. I just close early.
Investor237
I think Teddi goes out a month and then closes early.
I switched from weekly from 2 or more weeks out and close early.
7 days till expire has more gamma risk. In other words the odds of it being assigned are higher.
Sorry, Just came back on after six months away. Could you remind me what is CC in this case; not covered calls.
OP
I gave a quick look:
you opened the trade at resistance should be support areas.
I would start trading with straight naked puts maybe longer like monthlies. straight naked puts are just way easier and more flexible to repair.
spreads are complicated to manage and roll. The whole point spread is to reduce the money locked up. At some point, you in 31k tied up.
oct 26 you added more to trade to add profit? Why not use the money on something else?
MA had earnings 2 days away, broke 330 support. Risky.Why can’t you use text alerts and trade on your smartphone?
Op and Teddi,
Interesting perfect storm problem.
I didn’t read super in-depth. Seems like you did a Naked calls on a usually low Volatility stock, however it was before earnings so IV has high.
Your expiration was too short. I think prob would used one month out. So that you have time for it drop on a some strange stock moves before earnings.
With the monthly then I would closed early at like 50 Pct gain or something.
Teddi what’s your thoughts on expiration date selection on nAked calls?
Would a call credit spread be safer?
Then after expiration the volatility dropped more. So really no premium to repair this.
I would take the loss quickly and move on.
If it was consuming more then 20 Pct of my capital recovery. That’s another sign to get out.
Because I know I can recover it with another stock.
Rather then being stuck in painful year long repair.
However if volatility so low maybe buying one long put maybe 6 months out.
Would help recoup the loss.
I am sort improvising Teddi put spread rescue.
Where u leave the long put open. Which seems to work when I blow out put spread lol.
I think 80 Pct time if I am doing weekly I am using minimum 2 weeks out.
1 week usually get assigned where 2 weeks I could closed early at 50 Pct.
Depends on IV stocks you trade.
Just some thoughts for readers to consider.