wagrxm2000

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The reason why TSLA is so high is that I sell options all the time. When it hits the strike, I have to sell at the strike, so the gains look redic on that. If I have enough to sell 3 contracts a week, and it's about $2k each, that's $6k a week. Per month at $24k. I make more doing this than working as a pharmacist. My paycheck at work is $0 since it's all going to federal taxes. I can prove this too lol.

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Ha, you are kidding right?

You made a big bet and got lucky on Tesla. Everyone made money on Tesla during that run. Well except for one person who rather would play CVS

Welcome to another wallstreetbets bro folks.

I will say this congrats on the Tesla bet and please stop while you are ahead.

However, mark my words, this guy will be broke soon.
 
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aznkukuboi

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Ha, you are kidding right?

You made a big bet and got lucky on Tesla. Everyone made money on Tesla during that run. Well except for one person who rather would play CVS

Welcome to another wallstreetbets bro folks.

I will say this congrats on the Tesla bet and please stop while you are ahead.

However, mark my words, this guy will be broke soon.

I can do the same thing selling contracts of Amazon or msft or goog. I just prefer Tesla.
 

wagrxm2000

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I can do the same thing selling contracts of Amazon or msft or goog. I just prefer Tesla.
Come back in one year and let me know how things go

It's not hard to gamble and win when the stock you choose is up 250%

For every wallstreetbets winner there are hundreds of losers.

Don't fall for this
 
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Sine Cura

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Well if you have money it's easier to get dem capital gainz. Not saying I would put > $1 million in TSLA stock or have $1 million in collateral to sell TSLA weekly puts, but still
 

Monsterdaddy

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It was during 2014-2016. I lost big in biotech during the election when Hillary Clinton attacked Valeant Pharmaceuticals. All biotech stocks plummeted and I lost $90k in one day due to margin calls.
Sorry to hear that bro. This is the reason I tell folks to stay away from margin and also single stocks.

Ha, you are kidding right?

You made a big bet and got lucky on Tesla. Everyone made money on Tesla during that run. Well except for one person who rather would play CVS

Welcome to another wallstreetbets bro folks.

Mark my words, this guy will be broke soon.
@wagrxm2000 hey bro, that's pretty rude. Yes, anyone who bought Tesla since June of 2019 has made out like bandits. Give the man props for a lucky pick.

But @aznkukuboi , I would heed @wagrxm2000 's warning anyway. You've had a great run at EXTREME RISK. Probably best to diversify and reduce your risk exposure, see @PharmacistFl12 's story.
 
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wagrxm2000

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Sorry to hear that bro. This is the reason I tell folks to stay away from margin and also single stocks.


@wagrxm2000 hey bro, that's pretty rude. Yes, anyone who bought Tesla since June of 2019 has made out like bandits. Give the man props for a lucky pick.

But @aznkukuboi , I would heed @wagrxm2000 's warning anyway. You've had a great run at EXTREME RISK. Probably best to diversify and reduce your risk exposure, see @PharmacistFl12 's story.

Rude good advice?

I guess I'll take it. This guy is playing with fire.
 
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Monsterdaddy

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Rude good advice?

I guess I'll take it. This guy is playing with fire.
No kidding, totally agree. But unless you really want to see him crash and burn, at least I'd try to offer my fellow pharmacists advice in a form he may actually listen to.
 

Thestrugglez

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P.S. @Thestrugglez, FYI call options have higher premiums than puts -- basic option valuation, because you can earn interest on the cash securing the put. You can look this up. I was tempted to switch to the call side because of course E*Trade and other brokerages pay you basically nothing on cash balances (in essence selling calls allows me to "recapture" the interest.) But then I would lose the flexibility to initiate put spreads to hedge downside and/or increase buying power which is why I stick to rolling over puts.

Hmm could you emphasize what you mean? I was told the opposite at thetagang reddit. Looking at SPY, the 335 call has a slightly lower premium than the 334 put. Since SPY closed 334.57 on Friday, that means puts have a slightly higher premium no? Unless you are selling naked calls and you're recapturing the interest by having your cash sit in an interest account?
 

wagrxm2000

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No kidding, totally agree. But unless you really want to see him crash and burn, at least I'd try to offer my fellow pharmacists advice in a form he may actually listen to.

My advice can be taken whether it's seen as rude or not

What he's doing is clearly a sign of a gambling addiction. He either needs to seek help or he will lose it all
 
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aznkukuboi

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My advice can be taken whether it's seen as rude or not

What he's doing is clearly a sign of a gambling addiction. He either needs to seek help or he will lose it all

How does selling covered calls put me at a huge risk? It's a covered call for a reason. I own the shares and have the collateral.

If I were to do it with Amazon would you still give me a piece of your mind? Amazon contracts pay $4k a week. I still would make a ton of money doing this than working.
 
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Monsterdaddy

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How does selling covered calls put me at a huge risk? It's a covered call for a reason. I own the shares and have the collateral.
Bro, seriously that is a very naive assumption. I know you saw TSLA lose over 50% in less than 1 month earlier this year -- don't think it won't happen again. The option premium won't cover anywhere close to that kind of loss. Kudos to you if own TSLA without any margin borrowing.

Everyone will tell you, covered call writing reduces risk but doesn't eliminate it. TSLA is a single stock and has a IV of over 50% right now, that should be warning that your fat call premiums come with fat risks.

Bro, you've made a ton of money but this is seriously not something you can maintain long term. I'd like to see you keep it and keep building on it but you simply have too much exposure to a single highly volatile stock.
 

wagrxm2000

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How does selling covered calls put me at a huge risk? It's a covered call for a reason. I own the shares and have the collateral.

If I were to do it with Amazon would you still give me a piece of your mind? Amazon contracts pay $4k a week. I still would make a ton of money doing this than working.
My question is this. How much money do you need to be free? You literally could put that 1.7 million into a vanguard 3.2% dividend ETF and bank $54.4k a year

Just stop now, please.
 
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Monsterdaddy

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LOL, you are miss reading the statement, the account is a fraction of $1.5M (a good fraction nonetheless ;))

But that seems like going cold turkey and I wouldn't do it myself if I was in his shoes. He's young and has time to develop very good investing skills and continuing making good consistent returns.

@aznkukuboi why not diversify into ETFs. At least you will have instant diversification. If Elon Musk died of a heart attack, the S&P 500 or NASDAQ 100 would take some hit but no where close to what would happen to TSLA. You can still write calls on ETFs.

Also realize we are in a crazy bull market because the Fed has given everyone a put option with unlimited monetary support. These are not normal times and yes you should take advantage of it but don't get lulled into thinking this is forever. That's how a lot of fortunes become undone...
 
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Ever since March 2020 occurred and the stock market went freak ass crazy I've been putting in some serious effort into finally learning to trade stocks, options, futures, etc. Anyone else also going down this pathway?

I've always been interested in learning the ins and outs of the stock market and how to make money from price movements. But I graduated back in 2013 and just never had the money to really do anything, especially since I had a ton of credit card debt. Nowadays, I play with my 401K money in an IRA and plan to learn futures and apply to get a funded account. I genuinely want to go all the way and learn all I can as I am starting to get fed up with pharmacy. Looking for something I can do on my own time, from wherever I want, and without worry of licensing requirements and showing up to work, etc.

Figured I would start a thread if anyone was interested and we would perhaps pool thoughts and where to get good info to learn.
Yep, buying up major oil players at 20 year lows and planning to sell covered calls
 
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mentos

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This sounds like when poker players won a big tournament once or had a good night at the cash table and all of a sudden they make more at poker than at their job. I remember back when online poker wasn't banned yet, college kids would brag about making $5,000/week so they assumed they'd make $260,000 per year playing online poker. It's obviously not sustainable for the long term.
 
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Mad Jack

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My advice can be taken whether it's seen as rude or not

What he's doing is clearly a sign of a gambling addiction. He either needs to seek help or he will lose it all
How does selling covered calls put me at a huge risk? It's a covered call for a reason. I own the shares and have the collateral.

If I were to do it with Amazon would you still give me a piece of your mind? Amazon contracts pay $4k a week. I still would make a ton of money doing this than working.
Covered calls are a nearly risk-free options strategy. You limit your upside in exchange for guaranteed income now, it's basically a risk mitigation strategy for buy and hold players like myself, and is a common component in active wealth management portfolios. If that's what you're doing, and the guy you are responding to doesn't understand that, well... That's on him. I'm a big fan of dividend-paying stocks+covered calls, personally. Ultimately hoping to reach the point that I can get enough SPY to do covered calls at a high enough volume to retire early someday.
 

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Covered calls are a nearly risk-free options strategy...
This... is ABSOLUTELY FALSE. I've been writing covered calls for over 30 years. You should know what a ridiculous statement that is or you do not understand derivatives at all. Covered calls and cash secured puts are certainly the LEAST risky option plays but they in no way come close to mitigating the risk that comes with a volatile underlying stock such as TSLA. Again, did no one see TSLA fall 50% in less than 1 month back in March?????
 
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This... is ABSOLUTELY FALSE. I've been writing covered calls for over 30 years. You should know what a ridiculous statement that is or you do not understand derivatives at all. Covered calls and cash secured puts are certainly the LEAST risky option plays but they in no way come close to mitigating the risk that comes with a volatile underlying stock such as TSLA. Again, did no one see TSLA fall 50% in less than 1 month back in March?????
Oh he's selling on TSLA? Nevermind what I said. I didn't read the whole thread, thought he was rational and selling calls on SPY or similar like a reasonable person
 
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aznkukuboi

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Wagrxm must think I'm doing level 2 options or something. What I'm doing is no where what those guys on wall street bets do.


Selling covered calls and cash secured puts is a very solid strategy to play during a bull market. It's either, I make money by selling the premium, or I make money by selling at the strike. I've been doing this forever and got lucky on the huge run up. Every tech stock since January has had a huge run up as well. What's the risk? The stock Tanks? I just buy more shares and average down. Who cares.


As I've said before, if I were selling Amazon, this thread would not be blown up as it does. I sell tsla, my brother sells Amazon. Between us, our net worth is only $50k different ytd. Meaningless to me since I owe much more than that in federal taxes. Both of us have tripled our accounts this year.
 

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I don’t know what a covered call is, but I know when something sounds too good to be true. Please explain this nearly risk free way to invest in a way that consistently beats the market, I am all ears.
It is complicated. Basically a convered call is when you sign a contract to sell 100 shares that you already own for a set price at any point in the future. SPY currently trades for 334.57, so if you own 100 shares you can sell someone the option to buy it within the next 8 days for $339 for a fee of $117. If it doesn't hit 339 in the next 8 days, you made $117 for nothing. If it does, you get $117+(339-334.57) or $560 in profit on 100 shares. This limits your upside but with a stable stock like SPY, you can end up doing pretty well if you play things right, as you're collecting around 2% in dividends per year plus around $5,500 in options per 100 shares, in addition to any market gains. The only way you lose is either of the market greatly overperforms, in which you get less gains than average, or greatly underperforms, in which you may sell a set of options at way less than your initial price (a risk that can be mitigated by selling calls that are much less likely to reach the strike price while your assets are underwater).
 
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wagrxm2000

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All I see is 1.7 million proceeds.

What's the account at then?

What I see is you made 23% or over $200k from buying Tesla stock. I see common stock Tesla.

Did you or did you not have over $1 million in Tesla?
 
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wagrxm2000

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. Every tech stock since January has had a huge run up as well. What's the risk? The stock Tanks? I just buy more shares and average down. Who cares.

This is the comment that is extremely concerning.

Tesla could literally fall back to 700 in a month.
 
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All I see is 1.7 million proceeds.
Yep, it is proceeds from multiple sales of the same stock. So if only have $1800 in the account buy I buy and sell TSLA 100 times then the proceeds will be 100 x $1800 or $180,000 but the account value is just $1800. I estimated his account value from the number of options he sells.

Seriously @aznkukuboi don't you remember when Tesla fell 50% in Feb/Mar??? What if TSLA did NOT recover and continued going down? This applies to any single stock like AMZN too. That's how fortunes go goof and be honest with yourself -- you are not that smart and neither will you be as lucky as you have been.
 

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Wagrxm must think I'm doing level 2 options or something. What I'm doing is no where what those guys on wall street bets do.


Selling covered calls and cash secured puts is a very solid strategy to play during a bull market. It's either, I make money by selling the premium, or I make money by selling at the strike. I've been doing this forever and got lucky on the huge run up. Every tech stock since January has had a huge run up as well. What's the risk? The stock Tanks? I just buy more shares and average down. Who cares.


As I've said before, if I were selling Amazon, this thread would not be blown up as it does. I sell tsla, my brother sells Amazon. Between us, our net worth is only $50k different ytd. Meaningless to me since I owe much more than that in federal taxes. Both of us have tripled our accounts this year.

Selling covered calls is actually a bearish strategy since it limits your upside. During Teslas run from 1000 to 1500, covered calls would have severely limit your gains (that being said I obviously like covered calls since I am wheeling). If you truly believe in Tesla in the long run, I can see your reasoning for holding that much Tesla (although that's too risk loving for my taste).

Wagrxm and Monsterdaddy are just concerned since Tesla's valuation is insane. Even Elon Musk tweeted that Tesla stocks were overpriced back in late April when it was in the 700s. You are correct though that this wouldn't even be a discussion if you were holding Amazon/Apple/QQQ etc. But props to you for making bank on Tesla while I was FOMOing not buying Tesla when it dipped to $680 after Elon's tweet (though I know I would* have sold way before it hit 1500).

Also @Monsterdaddy I'm still curious as to why you're saying covered calls command higher premium than cash secured puts?
 

wagrxm2000

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Yep, it is proceeds from multiple sales of the same stock. So if only have $1800 in the account buy I buy and sell TSLA 100 times then the proceeds will be 100 x $1800 or $180,000 but the account value is just $1800. I estimated his account value from the number of options he sells.

Seriously @aznkukuboi don't you remember when Tesla fell 50% in Feb/Mar??? What if TSLA did NOT recover and continued going down? This applies to any single stock like AMZN too. That's how fortunes go goof and be honest with yourself -- you are not that smart and neither will you be as lucky as you have been.

It literally says beside it gains +$274k from the sale of Tesla common stock.
 

wagrxm2000

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I don’t know what a covered call is, but I know when something sounds too good to be true. Please explain this nearly risk free way to invest in a way that consistently beats the market, I am all ears.

This is why you stay out of this. Multiple people trying to explain the same thing and none of them are on the same page.
 
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Thestrugglez

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I don’t know what a covered call is, but I know when something sounds too good to be true. Please explain this nearly risk free way to invest in a way that consistently beats the market, I am all ears.

How I think of covered calls is that if I have a stock worth $10 and someone pays me $1 to sell it to them in 3 months at $11. By accepting this contract, my max profit is $12 ($1+$11) since I accepted their $1 and agreed to sell it to the other person at $11. However, if the stock is below $10 in 3 months, the other person will just let the contract expire since they have the option to buy the stock at $11, but they don't have to buy the stock.

3 scenarios
If the stock in 3 months is below $12, I earned more than I would have just holding the stock.
If the stock in 3 months is at $12, I broke even.
If the stock in 3 months is above $12, I missed out on earnings.

Not sure if that made things any more clear.
 

wagrxm2000

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How I think of covered calls is that if I have a stock worth $10 and someone pays me $1 to sell it to them in 3 months at $11. By accepting this contract, my max profit is $12 ($1+$11) since I accepted their $1 and agreed to sell it to the other person at $11. However, if the stock is below $10 in 3 months, the other person will just let the contract expire since they have the option to buy the stock at $11, but they don't have to buy the stock.

3 scenarios
If the stock in 3 months is below $12, I earned more than I would have just holding the stock.
If the stock in 3 months is at $12, I broke even.
If the stock in 3 months is above $12, I missed out on earnings.

Not sure if that made things any more clear.

I would add if the stock falls to $6, while you still earned more, you still lost all that money.

It's also why i didn't understand why one of you guys said you enjoy covered calls in a bull market. Sure you won't lose much but it's limiting your gains tremendously.
 

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Those option premiums aren't risk free money. It pays well because you take on all the risk. Cash secured put or covered call. If it goes way below or beyond the strike price, you lose big. Very naive to think you don't lose anything every time you get paid in premium selling options. The risk are real, however, your win percentage is much higher selling than buying options. You get paid a few grand here and there to risk hundreds of thousands of dollar if the trade goes against you. It's kinda like playing black and red in roullete (selling option) vs. playing the number (buying option).

Just hope you continue to get lucky and you don't sell a dud.
 
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Mad Jack

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I would add if the stock falls to $6, while you still earned more, you still lost all that money.

It's also why i didn't understand why one of you guys said you enjoy covered calls in a bull market. Sure you won't lose much but it's limiting your gains tremendously.
Shorter time horizons and calls that are less likely to hit strike can limit your loss of upside considerably.
 

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Those option premiums aren't risk free money. It pays well because you take on all the risk. Cash secured put or covered call. If it goes way below or beyond the strike price, you lose big. Very naive to think you don't lose anything every time you get paid in premium selling options. The risk are real, however, your win percentage is much higher selling than buying options. You get paid a few grand here and there to risk hundreds of thousands of dollar if the trade goes against you. It's kinda like playing black and red in roullete (selling option) vs. playing the number (buying option).

Just hope you continue to get lucky and you don't sell a dud.

That’s why you do it on the stocks you wouldn’t mind owning.

So in case if you are stuck with 100 shares at higher price point, it wouldn’t matter because you are reasonably confident it will come back up.
 

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Selling covered calls is actually a bearish strategy since it limits your upside...

Also @Monsterdaddy I'm still curious as to why you're saying covered calls command higher premium than cash secured puts?
Hi @Thestrugglez , so basic options 101:

Selling covered calls or any puts, buying calls = bullish strategy
Buying puts, selling naked calls = bearish strategy

The definition of bull or bear is based on whether your strategy makes money if the stock goes up or down. So selling covered calls loses money when the stock declines over the premium received. If the stock goes to infinity, yes you lose out on all that upside but technically the covered call trade made money from the time you placed the trade so it is a bullish strategy.

For options premium prices, see this link: Options calculator

Put in any stock symbol and set the strike price and actual stock price the same and you can see calls always have more premium value than puts. As I said before, it's due to interest you "may" earn on the cash securing a put (or alternatively, the interest you forego when you buy a stock and then sell a covered call.)

Also, note that option time values are the highest for strike prices at the money and relatively higher at shorter expiration dates vs longer expiration dates, i.e. 1 week vs. 2 week option, the value of the 2 week option is never going to be 2x the 1 week and is in fact significantly less. So writing at the money, earliest to expire options is the best return on paper.

For folks who don't understand options, I would say this. It can definitely be a high risk speculative trade and you can lose 100% of your investment easily. But it has very legitimate uses and is a great tool to moderate risk/volatility. For example, if you own TSLA and buy a put then you are hedging, i.e. if TSLA tanks then the put makes money to offset your losses in the stock. Similarly, covered calls hedge downside but only to the limit of the premium you receive. Options all expire so this introduces a very interesting time element to investing. If you own an option, time is against you, if you sell options time is with you. i.e. Cash secured puts, you are shorting the put so as time gets closer and closer to expiration the value goes down (and eventually zero if there is no intrinsic value).
 
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Hi @Thestrugglez , so basic options 101:

Selling covered calls or any puts, buying calls = bullish strategy
Buying puts, selling naked calls = bearish strategy

The definition of bull or bear is based on whether your strategy makes money if the stock goes up or down. So selling covered calls loses money when the stock declines over the premium received. If the stock goes to infinity, yes you lose out on all that upside but technically the covered call trade made money from the time you placed the trade so it is a bullish strategy.

For options premium prices, see this link: Options calculator

Put in any stock symbol and set the strike price and actual stock price the same and you can see calls always have more premium value than puts. As I said before, it's due to interest you "may" earn on the cash securing a put (or alternatively, the interest you forego when you buy a stock and then sell a covered call.)

Also, note that option time values are the highest for strike prices at the money and relatively higher at shorter expiration dates vs longer expiration dates, i.e. 1 week vs. 2 week option, the value of the 2 week option is never going to be 2x the 1 week and is in fact significantly less. So writing at the money, earliest to expire options is the best return on paper.

For folks who don't understand options, I would say this. It can definitely be a high risk speculative trade and you can lose 100% of your investment easily. But it has very legitimate uses and is a great tool to moderate risk/volatility. For example, if you own TSLA and buy a put then you are hedging, i.e. if TSLA tanks then the put makes money to offset your losses in the stock. Similarly, covered calls hedge downside but only to the limit of the premium you receive. Options all expire so this introduces a very interesting time element to investing. If you own an option, time is against you, if you sell options time is with you. i.e. Cash secured puts, you are shorting the put so as time gets closer and closer to expiration the value goes down (and eventually zero if there is no intrinsic value).

Interesting, the options calculator certainly illustrates that calls command higher premium. In the actual market, I see that puts can sometimes command higher premiums compared to calls, but I guess that really depends due to demand?

How do you determine a strike price for weeklies? Do you tend to use a certain delta or is there a certain price you typically have in mind since you tend to sell CSP on TQQQ.
 

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How do you determine a strike price for weeklies? Do you tend to use a certain delta or is there a certain price you typically have in mind since you tend to sell CSP on TQQQ.
I simply write the put options closest to at the money. That way I get paid the maximum time value which is quite significant. If I am a little bullish I pick the strike price that is slightly ITM and if bearish I pick the OTM one. I use limit orders and if I think TQQQ will gyrate a little lower I will price the put above the current market and hope TQQQ goes down a bit. Yes, this is market timing and sometimes I win and sometimes I lose.

Today was the best market timing guess I've had in weeks, I priced the TQQQ $120 at $4.20 when the option was $3.50?! and TQQQ was about $122?! Stock dipped down to low $120's for only a few seconds but my orders executed. Originally, I was going rollover on August 5th but thought TQQQ at $126 was kind of pricey so I waited. The next day TQQQ hit ATM of almost $132 and I passed on writing again. On Friday, TQQQ dove as low as $123 but I missed the dip and passed again. TQQQ closed today over $125 so I feel pretty good.

P.S. Oh, I forgot -- there is one other actually pretty important factor that influences the strike price I pick. For TQQQ, there is a lot more interest and volume in any strike price that ends in 5 or 0. So if the current price is close to one of those I will probably try to write those. I know for sure that spreads are tightest there and there is better execution. Which is actually why I chose $120 today (and I chose this strike in the morning back when TQQQ was ~$127.)
 
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aznkukuboi

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Cool. How many shares of Tesla do you own? I was actually working on building up Tesla to sell covered calls but then covid happened and **** went wild. I sold everything at like 750, and started buying back at 450s, up until recently. I didnt get to 100 shares to do covered calls (but I didnt have them before)

I agree with wag that CC have some risk but if you were gonna hold the stock anyhow long term, all your doing is getting extra money from premium to buy other stocks and theoretically lower your cost basis / risk of holding.

I'm excited to be able to sell calls since its splitting.

I'm at 287 shares right now. My $1530 call might get excised because of the news of the split. I'm still young and can fail a bunch of times before I actually have to worry anyway. But since I'm super bullish with this company, I'm not afraid. They are leading the industry with electric vehicles and beat all of the others. I see the stock going to $5k by 2025. (or $1k after split). My entire family owns about 18 teslas. You can see why I love this company so much.
 

wagrxm2000

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I'm at 287 shares right now. My $1530 call might get excised because of the news of the split. I'm still young and can fail a bunch of times before I actually have to worry anyway. But since I'm super bullish with this company, I'm not afraid. They are leading the industry with electric vehicles and beat all of the others. I see the stock going to $5k by 2025. (or $1k after split). My entire family owns about 18 teslas. You can see why I love this company so much.

Very curious, over what time do you see them as a trillion dollar company? Revenue was about 25 billion last year and they may do around 28 billion this year. Not saying it won't happen just curious.
 

Deja

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I make more money trading than I do working. So I make $93/hr as an rph, which would equate to about $190k a year.

Trading stocks I'm up $265k year to date.

everyone talking about how you invest.... I want to know what do you do for work that you are making 93/hr lol
 

aznkukuboi

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everyone talking about how you invest.... I want to know what do you do for work that you are making 93/hr lol

Kaiser my friend. Union sets my pay.

On a side note, I got tired of Chase without having a margin account and moved to ameritrade. I've used three different brokers and this is still my favorite. Chase is garbage.

Screenshot_20200814-100909.jpg

So for those who don't understand. I currently own 301 shares at an average of $1443.15 per share. I sold to open 3 contracts (300 shares) that by January 15, 2021 Tesla at a strike price of $2100 (Ironically that is $420 after the split). If Tesla is under $2100, I collect the premium $17928 x 3 = $53,784. If Tesla is over my strike, I sell 300 shares at $2100 and collect my $53,784.

If anyone is doing the math, I either make $53,748 or $250,839 by January 15th. Either way, it's still a lot of money to collect and be a pharmacist at the same time. For those who say the stock is extremely volatile and may drop in half again, I could care less. I collect the premium and hold. This company is the Apple of cars. It's the future for at least the next decade. I can probably retire by then.

Flame on.

Go Elon.
 

Monsterdaddy

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If anyone is doing the math, I either make $53,748 or $250,839 by January 15th.
No one wants to flame you but anyone doing the math knows there are many other scenarios, i.e. Tesla drops in half and stays there, then you will wind up losing $216K on paper. You don't seriously believe that you have zero risk in this do you? Saying you could care less just means you simply don't recognize the risks you are taking.

Wang Computer was a leader like TSLA, did you even hear of this company? Lots of "great" companies have crashed and burn, TSLA I hope does not but it doesn't mean it can't.
 
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wazoodog

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Kaiser my friend. Union sets my pay.

On a side note, I got tired of Chase without having a margin account and moved to ameritrade. I've used three different brokers and this is still my favorite. Chase is garbage.

View attachment 315866

So for those who don't understand. I currently own 301 shares at an average of $1443.15 per share. I sold to open 3 contracts (300 shares) that by January 15, 2021 Tesla at a strike price of $2100 (Ironically that is $420 after the split). If Tesla is under $2100, I collect the premium $17928 x 3 = $53,784. If Tesla is over my strike, I sell 300 shares at $2100 and collect my $53,784.

If anyone is doing the math, I either make $53,748 or $250,839 by January 15th. Either way, it's still a lot of money to collect and be a pharmacist at the same time. For those who say the stock is extremely volatile and may drop in half again, I could care less. I collect the premium and hold. This company is the Apple of cars. It's the future for at least the next decade. I can probably retire by then.

Flame on.

Go Elon.

Do your TSLA shares represent most of your ameritrade portfolio? Or are you diversified across other positions?

My cost basis for TSLA is around 810 but my position isn't anywhere near as large as yours - less than 5% of my ameritrade account.
 

Monsterdaddy

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With the option premium, it gives him $150 per share in downside protection. Not saying it isnt risky but Tesla isn't going to drop 50% unless everything does.
In 2019, in a span of 6 months TSLA dropped 50% and that was a great year for stocks. So that's twice in 2 years TSLA has dropped 50%.
 

Sine Cura

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On Aug 3, MGM closed at $16.32. I sold OTM (at the time) covered calls @ $17.5 with 8/14 expiry. to collect a little premium. Then after the IAC news MGM gained ~33% and closed above $21 yesterday.

Picking up pennies in front of a steamroller indeed.

Welp I wasn't ever going to buy back those calls
 

Monsterdaddy

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You realize the point I am making. Not all stocks will recover or if they do it could take a long time. NASDAQ took over a decade to recover from the internet bubble. 100% all in on TSLA is playing with fire, having a covered call is like having a small cup of water to douse the flames.
 

Monsterdaddy

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On Aug 3, MGM closed at $16.32. I sold OTM (at the time) covered calls @ $17.5 with 8/14 expiry. to collect a little premium. Then after the IAC news MGM gained ~33% and closed above $21 yesterday.

Picking up pennies in front of a steamroller indeed.

Welp I wasn't ever going to buy back those calls
Don't think of it like that. It should be congrats! Your strategy played out. Look, I do CSP on TQQQ so in the last few months I should feel way worse than you haha!

But on a risk adjusted return basis you did well. That's why I don't regret TQQQ shooting up so high because on a risk adjusted basis I did pretty well - exactly as planned if not better. Some weeks when TQQQ is flat my CSP strategy beats TQQQ, when TQQQ nosedives and I have to rollover 1-2 weeks (collecting more premium along the way) before TQQQ recovers I beat TQQQ again.

So say at the end of the year TQQQ beats me by 10-20%, does that mean I lost out? No way, in fact, on a risk adjusted return basis I may have beaten TQQQ.
 

mentos

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I still don't understand what a ghetto spread means.
 

Thestrugglez

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I still don't understand what a ghetto spread means.

So a spread is when you buy a call and sell a call at a different strike price. Eg: buy $2100 TSLA and sell $2110 TSLA.

A ghetto spread is basically buying a $2100 TSLA call for eg, $80. Then, after Tesla stock prices go up, you sell a $2110 call for eg, $100.

In reality, you just bought a naked call which gained some value. Then you got cold feet, but still think your call might go up more. So as a hedge, you sold a different strike to lock in some profits.

edit: you could also do spreads on puts. The idea is the same
 

mentos

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The reason why TSLA is so high is that I sell options all the time. When it hits the strike, I have to sell at the strike, so the gains look redic on that. If I have enough to sell 3 contracts a week, and it's about $2k each, that's $6k a week. Per month at $24k. I make more doing this than working as a pharmacist. My paycheck at work is $0 since it's all going to federal taxes. I can prove this too lol.

View attachment 315368

How did you do today? I don't understand covered calls or anything but was just wondering if your plan went through risk free as you said.
 
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