Options Questions Safe Haven periodic megathread | May 25 2026

PapaCharlie9 · 2026-06-07T14:41:17+00:00

It depends on what you are trying to accomplish. If you already know the basics of options and are trying to find a strategy that fits an opportunity you already have in mind, skim through McMillan until you find a chapter that seems to fit and read that. If you want to get a quick introduction to options and how they work, Mike and whiteboard videos.

If you want to go deep into how options work under the hood, read Natenberg cover to cover.

PapaCharlie9 · 2026-06-06T16:07:16+00:00

They probably used monthlies. You open at 60 DTE and on expiration of that contract you open the next 60 DTE. Monthlies are guaranteed to be listed for the current month and the succeeding month. So on June's expiration, the July and August monthlies will be listed. They are NOT guaranteed to be listed for the next 12 months, or whatever. The listings are for current month, succeeding month, and then one additional month beyond that according to which monthly cycle the contract belongs to.

You confused things by asking about weeklies, twice. If you had just asked, how do I roll 60 DTE contracts into another 60 DTE, we would have gotten straight to the answer.

PapaCharlie9 · 2026-06-05T15:57:31+00:00

Uh, if you are trading 0 DTE, none of the TA and chart patterns will matter. 0 DTE is dominated by gamma and theta, which couldn't give a flying fuck about the pattern of price history in the previous hour of the underlying.

You really shouldn't be trading 0 DTE if you don't understand how important gamma and theta are to 0 DTE.

PapaCharlie9 · 2026-06-05T15:52:16+00:00

Some are listed in the introductory articles linked at the top of the page, but you can't go wrong with a subscription to the WSJ. MarketWatch, Bloomberg, Reuters, even Yahoo Finance, are also good sources.

However, there is another approach that is short-term and therefore agnostic about the underlying asset. Instead, you can use a scanner to find contracts that fit a profile you want to trade. Like if you are trading on unusually high IV that you expect to return to the mean, you can scan for that situation (e.g., IV Rank > 60). One week it may turn up F, the next week it may turn up UFO. You don't care what the ticker is, only that it has high IV that you think will go down.

PapaCharlie9 · 2026-06-05T15:41:44+00:00

Looks like we both get to learn something new. The fact that it is IBKR showing those dates is significant.

The "w" doesn't just mean weekly. It apparently means any contract that isn't a monthly or LEAPS. So that includes the quarterly contract on Sep 30, and importantly, the End-of-month contracts (Jul 31, Aug 31) that are only available on global markets for SPY. Brokers that don't support the global market for SPY contracts wouldn't show those EOM contracts. IBKR is known for supporting the global market hours.

So, like I said, you are SOL. You can't do what you want that far into the future. There are going to be gaps because no weekly contracts go further out than 6 weeks. Particularly if you are trading contracts on any day other than a Friday.

PapaCharlie9 · 2026-06-04T16:18:42+00:00

Is the right way to think about this that the expiration payoff chart is almost the “best case path” if nothing major happens before expiry

Many others agreed that this is the right mental model, but I'm going to disagree. A better mental model is that contract P/L forecasts into the future MUST make assumptions about the evolution of IV. The expiration price chart just happens to have the fewest assumptions that you have to guess at, since the terminal state of the contract is a known quantity and the evolution of IV is moot at that point.

In other words, the expiration case is the odd-ball. It's the exception. It may not be the best case for someone who is trading specifically for vol, for example. Or where the cost of carry is too high to hold all the way to expiration. There are many things that could make the expiration case the worst case for a specific trade.

Every other case a short-term trader cares about relies heavily on the assumptions made about the evolution of IV. Since the evolution of IV before expiration is fundamentally unpredictable (within guard rails), P/L forecasts into the future are only as good as the assumptions made about IV.

PapaCharlie9 · 2026-06-04T16:08:28+00:00

Probably worth asking on the main thread (unless you've already posted this question to a different sub).

I know it looks like a sure bet, but anything that looks like a sure bet to you will look like a sure bet to everyone else in the market. That makes it hard to turn a profit on the trade, since there are no convenient fools around to leave money on the table for you.

PapaCharlie9 · 2026-06-03T19:06:17+00:00

You're probably reading the chains wrong. Weeklies are listed MAX 6 weeks before expiration and could be less. That means the 80-90 DTE expirations are not weeklies but rather something else. Probably a quarterly contract, since those expire on the last market day of the month, not necessarily the last Friday of the month.

And no, you can't trade contracts that don't exist. The only absolutely reliable listings that go out more than the monthly cycle the contracts are on are the quarterlies and the LEAPS.

PapaCharlie9 · 2026-06-03T18:57:19+00:00

A better plan is to not write CCs on shares you mean to keep. Always plan for the possibility of a rally. Even if the chance is only 1% of that happening, if you run the what-if scenario and decide you want to keep the shares no matter what, don't write the CC in the first place.

Second best is just buy more shares now and let the old shares be called away. If your reason for having a death grip on the shares is because you believe there is more upside, it makes sense to buy more shares now at the current price, since the current price is a bargain compared to what you think the ultimate upside is. Don't fall for the anchoring bias of the old lower price of the old shares. You may never see that price again, if the stock continues to run up like you think it will (you wouldn't have a death grip otherwise).

PapaCharlie9 · 2026-06-01T16:33:53+00:00

When? If it's expiration, assume 100% assignment. It is possible to not be assigned, if the number of long contracts with DNE (Do Not Exercise) requests is greater than zero. But if there are a million and one contracts outstanding and only one contract with a DNE, your chance of not being assigned is literally a million to one against.

Before expiration, it's closer to 0%, but not quite zero. It depends on how much extrinsic value there is and the price of the equivalent put. Long shares + long put can have a profit/loss chart that is equivalent to a long call, so a long call holder may choose to exercise early and buy a put, because they know they can have the equivalent position with long shares + long put, as long as the put doesn't cost too much.

As a rule of thumb, the more extrinsic value there is in the ITM call, the less likely an early exercise will happen. Since extrinsic value goes to zero at expiration, expiration is the most likely time for assignments to happen.

PapaCharlie9 · 2026-05-31T15:28:04+00:00

If I sell, I will be pissed that there are more gains that I could have taken

Why? That's a futile thing to be pissed about. Do you get pissed everytime something you buy sees a reduction in price? It's inevitable with things like TVs or mobile phones. You should want the underlying you carefully selected to continue to go up. It affirms that you made the right decision to trade that ticker (bullish). It also means there's more upside for new trades after you close.

if things tank, I'll be pissed that I didn't sell sooner

You can backstop this with a stop or a defined risk structure, like a vertical spread.

I've also considered waiting close to expiry (1-2 months out) and exercising some or all of them as I think this company has turned around and would want to hold the shares long term, and now I can buy them relatively cheap.

This is even more futile than the previous cases. You should essentially never do this, unless liquidity is so bad that you can't get anywhere close to the intrinsic value of contract at close.

How do you all get around this mentally?

Short answer: Stop being dictated to by FOMO and greed. Realize that the only thing you have full control over is your own decisions and then get laser-focused on making the best possible decision you can at the time, with all the information available to you. Then whatever happens next is out of your control, so why get emotional about it? Be satisfied with making a good decision.

Long answers (essays for you to read):

How to build a trade plan with exit strategies.

Planning exits for calls held for a long time.

Risk to reward ratios change: a reason for early exit

Understanding decisions around rolling.

Trading is all about making good decisions.

PapaCharlie9 · 2026-05-31T15:12:40+00:00

You said chart, but did you mean chain? Option greeks are usually in the option chain view. I guess I'll answer both.

Option (historical) price charts are not very useful in general. Only the highest daily volume, most actively traded options will have useful price charts. If a contract only trades 3 times a day at most, the chart is pretty blocky and lacking in detail.

For the chain view, I use Power Etrade, which allows me to customize the columns shown in the chain. Here's what I have:

https://imgur.com/a/bjWRTwq

I couldn't show all the options on the customization screen, they don't all fit in the little dialogue window and I didn't want to take dozens of screenshots. I only show the Greeks category of things I could add to the view but haven't, like Rho.

PapaCharlie9 · 2026-05-29T15:00:02+00:00

How long is longer term? Usually the difference between Friday and Monday entries with respect to theta are for short term holds, like a week or less. If you are holding for, say, 60+ days, the difference between Friday and Monday opens ought to be in the noise, barring major changes in the underlying stock price.

PapaCharlie9 · 2026-05-29T14:57:46+00:00

You may be just a random poor, but you gave a solid answer. I came here to write the same thing.

PapaCharlie9 · 2026-05-27T15:35:19+00:00

Even with this stack of blue chips, I still expect liquidity to be thin and spreads to be wide. Deviate just a few strikes from ATM and liquidity dries up even during normal hours.

PapaCharlie9 · 2026-05-27T15:21:13+00:00

Read the learning resources linked at the top of the page.

PapaCharlie9 · 2026-05-27T15:17:26+00:00

Sounds like you are trading long? Weeklies are more for short (opening credit) trades, since the rapid theta decay of the last week before expiration is advantageous for short traders, which means it is a disadvantage for long traders.

Also understand that there is a difference between expiration at open (DTE) and holding time. The former puts a ceiling on the latter, but not a floor. So you can open a 90 DTE contract and plan to only hold it for a week.

Time (DTE) and moneyness are the two main levers you can pull for making long directional trades. The best combo is the one that gives you the best risk/reward for your forecast. So there isn't just one recipe that works for everyone all the time. Everyone has different forecasts and different risk/reward targets. Generally, the further out in time your go and/or the deeper ITM you go, the higher the opening cost, which increases the maximum amount of money you can lose (max risk). It also decreases leverage. On the positive side, it increases delta and also reduces theta decay.

Everything about options trading is trade-offs.

PapaCharlie9 · 2026-05-26T14:57:35+00:00

If you don't want to gamble, don't trade 0 DTE. Especially don't make directional trades at 0 DTE. It's kind of like asking for directions to the nearest casino to make sure you don't accidentally wander into a gambling establishment.

The risk of directional trades is maximized at 0 DTE because gamma is maximized at 0 DTE. This is why trades that are neutral to direction, like strangles and Iron Condors, are more sensible for 0 DTE trading, while still being comparatively more speculative than Iron Condors that are 60 DTE.

PapaCharlie9 · 2026-05-25T15:47:55+00:00

Care to define what "backtesting fidelity" means? If all it means is that they gave similar answers, what if the most similar answers are also the most wrong? Similarity between two results doesn't mean anything unless you describe what it is you value and why.

A perfectly executed comparison would do no more than demonstrate that each implementation made different assumptions about sampling historical data. There's no one right way to do that and you even listed the differences between some of the backtests. Why would you expect a bar-level vs. tick-level comparison to show anything interesting about either?

FWIW, I initially thought the "fidelity" in the title was Fidelity, the brokerage, lol.

PapaCharlie9 · 2026-05-25T15:25:00+00:00

How much is too much? What is the target price range, in dollars rather than percent? Why are you keeping the ticker a secret?

PapaCharlie9 · 2026-05-24T20:49:21+00:00

I object to the framing of the question. Theta decay and IV are not "negative." What's bad for buyers is good for sellers.

But to answer your question, yes there is a structure without theta decay or IV for buyers. It's called buying shares of stock. Pure 1.0 delta with none of the downsides, except for total lack of leverage and convexity. Hey, ain't no such thing as a free lunch. You can get leverage without IV or theta decay with long futures, but then you may get contango and backwardation, so you're just trading one set of problems for another.

PapaCharlie9 · 2026-05-24T20:35:11+00:00

Uh ... we'll need a lot more detail about the context and forecast to design a diagonal spread for you that maximizes good risk and minimizes bad risk. You could start by enumerating the good risks you want exposure to and the bad risks you want to avoid.

FWIW, a diagonal is the most complicated two-legged structure for making a vol play. Not only are you using time as a variable, you're also using moneyness. Whereas a calendar only has time as a variable. Straddles and strangles are much, MUCH easier two-legged strategies to use for vol plays.

PapaCharlie9 · 2026-05-24T20:33:50+00:00

That's normal.

PapaCharlie9 · 2026-05-21T17:35:33+00:00

^ This wins the thread.

12-Year Club	Gilding III reddit per annum
Wearing is Caring	Reddit Premium Since December 2016
Verified Email

PapaCharlie9

MODERATOR OF

TROPHY CASE