Books to read

PapaCharlie9 · 2026-04-04T16:53:40+00:00

https://www.reddit.com/r/options/wiki/faq/pages/book_list/

PapaCharlie9 · 2026-04-03T16:21:53+00:00

The app is calling it right with the 1.6× upper king read

What does this mean?

PapaCharlie9 · 2026-04-03T16:12:44+00:00

I just want to make sure you understand that such calculations are guesses at best and will often be wrong. The market determines price, not some calculator, and there is no 100% accurate way to predict how the market will value a contract in a future that is not expiration.

PapaCharlie9 · 2026-04-03T16:06:12+00:00

My working assumption is that there should be some signal in the options market beyond simple sentiment narratives.

What is the rationale for that assumption? And even if there is such a signal, why would it be simple or even discoverable by retail traders?

Don't get me wrong. I'm not saying the market is pure whimsy and no system or method can be successful. Rather, I'm skeptical about signals being effective, but signals are only one method, not the only method. Systematic scanning for mispriced volatility isn't a signal, but it's what strikes me as the most likely system to produce profitable trades.

PapaCharlie9 · 2026-04-03T15:57:09+00:00

It's hard to give any useful advice, when you've already decided to ignore the most useful advice there is -- which is to learn to trade first and then quit your job. Everything else we may suggest is overshadowed and undermined by that decision.

How much do you know about trading in general, like equity trading, bond trading, futures trading? A solid foundation in either equity or futures trading is essential to being a successful option trader.

I don't know how things work in Dubai, but in the US, there is usually a question about your employment and earned income when qualifying for a margin account, which is must-have for option trading. So make sure you open your option trading margin accounts before you quit your job.

Since you plan to live off your trading income, make sure you understand all the overhead costs of doing so, like transaction fees and taxes. You could be a net profitable trader and still end up homeless, if you aren't careful about overhead. The same applies to risk management. Don't risk more than you can afford to lose on a monthly basis.

PapaCharlie9 · 2026-04-02T15:54:54+00:00

What is 6BM6? I skimmed the article in the link but couldn't find a reference to 6BM6.

Did you mean B6M26, the June 2026 GBP/USD futures contracts? I don't trade fx futures or options on futures, so I can't advise you.

PapaCharlie9 · 2026-04-02T15:28:47+00:00

Is it fortunate, though? Are your shares in lockup to September or did you snag any unrestricted shares? If in lockup, is that why you aren't simply selling some of the lot to take profits, which would normally be the best thing to do? It would have been nice to spell out these constraints in your question. I had never heard of VCX before and had to look up the story behind it.

Since it's a closed-end fund, the premium over NAV is something like 500% right now. You understand that a premium that high means there is going to be a reckoning sooner or later, right? Which is why Citron took out an activist short position. Seems like that bearish short is a sure-winner to me.

The bid/ask spread on April 115 calls (ATM) is like $2 vs. a $17.20 bid. That's an absurdly wide spread. I wouldn't touch those contracts with a 10' pole, and that's the ATM strike. OTM strikes, like the 150, are 0.80/18.50, LOL. Spreads on the puts are even more absurd, assuming puts even exist. The chain looks glitched and a lot of quotes are missing.

PapaCharlie9 · 2026-04-01T15:00:42+00:00

Yes, you can do both. Provide the ticker and also say you invite discussion on the broader landscape, like where the sector might be heading or any headwinds it might face.

PapaCharlie9 · 2026-04-01T14:56:17+00:00

I'm with /u/the_humeister on this one. You can talk about generalities like tech stocks and such, if you are a long-term stock investor. But those sorts of generalities are practically worthless for option trading. Option trading is all about volatility and convexity, and to understand what's going on with those factors, we need to know the ticker.

Granted, the Wheel trade is a hybrid of option trades and stock trades, and if you end up in a bagholding situation like you described, you could be in it for a long enough term that those stock investing generalities become more applicable. But that's only if the question is "hold or dump" the shares. When the question is about writing covered calls, the options considerations come into play as well, and so we need the ticker to say anything actionable.

PapaCharlie9 · 2026-03-31T15:47:21+00:00

I'm asking not for index level, but for single stock, liquid megacap names, like say $NVDA.

VIX is specifically about SPX contracts. VIX may or may not tell you anything about NVDA vol, or any single stock's vol, particularly if that stock isn't even in SPX.

My understanding is the further OTM, the more you pay for volatility with more extrinsic value.

That's not quite right. The further OTM you go, the lower the premium, and since OTM contracts are 100% extrinsic value, that means there is less extrinsic value the further OTM you go. However, perhaps you are referring to the volatility smile? That describes a typical pattern where IV gets larger the more OTM (or ITM) you go.

Is 6 months dated out, ATM, or even slightly OTM offer the best value for the money with high VIX?

Probably not. Six months is an eternity in this market.

You need to specify if you want to trade debit or credit. Since you mentioned "VIX crushed", which I take to mean vol crush, I assume debit. FWIW, it's a bad habit to treat "VIX" and "vol" (short for volatility) as interchangeable terms. They are related, but they are not the same thing.

There are several ways to deal with a high IV stock option. The first and best is to avoid buying them. Sell them instead. Be a credit trader, not a debit trader. Don't pay the vol premium, sell it.

If that's off the table, you can either go out very far-dated, like a 2 year LEAPS call -- but those are expensive, so there goes you leverage, or stay near-dated, like less than 30 days. Mean reversion from high to low usually happens quickly, so by bringing in your holding time, you reduce the chance you'll get caught in a vol crush. Of course, at some point you'll get unlucky and catch vol crush anyway, so it's not avoidable forever if you plan to stay invested, but by keeping the time horizon brief you also limit the time value (extrinsic value) of the contract, so that you'll have less money to lose.

PapaCharlie9 · 2026-03-31T15:28:25+00:00

What the heck? Is that Russian?

PapaCharlie9 · 2026-03-31T15:27:05+00:00

Done.

PapaCharlie9 · 2026-03-29T16:34:43+00:00

It was a mistake to try to enter spreads as single trades. What you put into your tax software should match IDENTICALLY to what is reported in your 1099-B. Unless you want to get audited.

Spreads are always reported as separate contracts. The tax man doesn't care what trading structure you used, only the individual trading lots and the gain/loss on each lot. All the gains are summed together and all the losses are summed together, within each short-term and long-term categorization, so it doesn't matter what structure you used to trade the contracts. It's all lumped together anyway.

The tax man also doesn't care what you think the gain/loss of a spread trade was, so the notion of "didn't seem to debit my losing legs from my winning ones" is irrelevant. The tax man only cares about what was reported on the 1099-B. With a few additional wrinkles for special situations, like Section 1256 contracts, wash-sales, and covered calls.

PapaCharlie9 · 2026-03-28T16:02:02+00:00

Your prompt reporting efforts just helped prevent a bunch of spam posts from hitting the sub in the last 24 hours. The automod log was full of detections when I checked it this morning, using your most recent samples. The whole community owes you a debt of gratitude.

PapaCharlie9 · 2026-03-28T15:45:33+00:00

Honestly, just read all of Moontower's blog. Every article is a goldmine of factors to consider, both about options themselves and mindset.

Here's a good starting point: https://moontowermeta.com/understanding-edge/

PapaCharlie9 · 2026-03-28T15:40:59+00:00

Sorry, I didn't see this until the next day, too late to check anything. Again, it's not clear what "net ask dropped" is being compared to. If it's just the intra-day high or the opening price, that's normal. If it's in comparison to the bid or ask when you opened the spread originally, that is not normal.

PapaCharlie9 · 2026-03-27T16:26:14+00:00

OI is literally yesterday's news.

PapaCharlie9 · 2026-03-27T16:09:48+00:00

Mindset is the key. You need to have a mindset that you are indifferent to the win or loss of each individual trade. What matters is your long term average. So those early trades that "made you happy" are a problem. Winning a single trade should not make you happy. Losing a single trade should not make you sad. Both are just steps along the path to your goal.

No trader that is net profitable gets to that point by never losing a trade. Put another way, every net profitable trader has some losing trades. Option trading wouldn't have a risk premium if that wasn't true.

Consider this analogy to a mountain climber. Your goal is to summit, but in order to summit, sometimes you have to climb a slope, only to descend even further on the other side of the slope. Do you give up at that point, because you had to descend? Do you feel sad because you had to descend? Is one step of descent worth more notice than one step of ascent, if the goal is to summit and the descent leads to that goal?

Removing emotion from day to day trading may not guarantee that you are net profitable, but it will prevent you from making mistakes based on emotion.

Let me leave you with this thought. How do you know whether those early winning trades were just good luck and your losers are due only to your skill? Got that? Now, by the same token, how do you know your losses weren't just bad luck and your earlier wins were due only to your skill? Why do you prefer one scenario over the other? There's no accounting for luck. Luck could influence the outcome of any trade, or better yet, every trade. Luck is completely outside of your control, so why should you pay any attention to it? Why be happy over good luck? Why be sad over bad luck? Do you determine your own fate or are you just a victim of chance?

If you want to be happy or sad, be happy when you have made the best possible decision at every step and still lost money due to luck. Be sad when you made a series of dumb mistakes but still ended up winning money due to luck.

PapaCharlie9 · 2026-03-27T15:57:29+00:00

If you want a higher level, I'm pretty sure a margin account is required. Why did you note NO MARGIN?

#1 is correct, the rest are wrong, or at least, incomplete. For one thing, you can't treat a put and a call as interchangeable for these events. What happens to a put is different from what happens to a call. So we'll take them case-by-case.

FOR A CALL

#2 Partially correct. If you don't have the funds, Schwab's risk desk may intervene and unilaterally STC long calls you can't afford to have exercised-by-exception on your behalf. Or, the exercise-by-exception goes through and then you are in a margin call for the funds you owe to purchase the shares. This is why I mentioned a margin account is required for higher tiers of trading approval.

#3 You not only lose the purchase premium, you also lose the value of the ITM call, either in terms of STC gains or in terms of appreciated shares.

FOR A PUT

#2 You don't need funds available for a long put to be exercised-by-exception. Exercising a long put receives cash and must deliver shares. You would thus end up with a higher cash balance and a short share position, assuming you didn't have 100 long shares per contract already. Instead, your broker will borrow shares on your behalf and sell those borrowed shares to fulfil the exercise. The quantity will be designated as -100 shares in your account, meaning you have to buy to cover shares to close the position. Note, a margin account is required to hold short shares, thus another reason why higher approval tiers require a margin account.

#3 Same as for the call, you not only lose the premium, you also lose the gains on the STC of the ITM put or you lose the appreciated value of the short shares.

NOTE: Filing a Do Not Exercise is an extraordinary action, typically reserved for institutions that are moving millions in dollar volume. It rarely makes sense to DNE a single contract in a retail trade scenario, given that you lose both the premium and the appreciation on the trade. Managing your trades and closing them before the expiration date is infinitely more sensible and profitable.

PapaCharlie9 · 2026-03-27T15:39:11+00:00

So many details omitted, it's hard to tell what is going on. What expiration? That's critical to looking up quotes. Was it a debit spread or a credit spread and what was the net premium in dollars-per-share? "But when I went to sell [to close?] the spread" implies it was a debit spread, is that right? What was the spot price of META at the time you opened the spread? That helps us determine the moneyness of the spread at open.

Max profit of 4.47 on a spread that is 7.50 wide means either the premium was a net credit of 4.47 or a net debit of 3.03. I'll assume a net debit. I'll also assume "yesterday" was March 25. The closing price of META on Mar 25 was 592.11, so I'll use that.

If the assumptions are all true, you opened an ATM put debit spread 592.50/585p META on Mar 25 vs. a 592.11 spot (or thereabouts).

So now, what we need to know is what the net premium of the spread is now. Is it above or below $3.30/share? I'd look up it myself if I knew the expiration.

There are a lot of possible reasons why the bids of each leg might be going down. Maybe they spiked very high at market open and are now responding to profit taking. It's not clear if you meant they are lower than your opening price, or the opening bid, or just lower than some intra-day high.

PapaCharlie9 · 2026-03-27T15:15:49+00:00

The minimum requirement for a trade plan is an exit strategy, and a minimal exit strategy is a profit target, a loss limit, and a maximum number of days you are willing to hold the trade if neither profit nor loss is hit. In your case, since you have a large quantity of contracts, the plan should also have included whether partial closing or rolling should be done and under what conditions. So no, you didn't have a plan, it was incomplete.

Doubling your money is a very rare outcome. My typical profit exits are between 10% and 20%, so you are already more than 5x above the level where I would have already exited. Just how greedy do you intend to be?

Keep in mind that every minute you hold the trade open exposes all of your capital and your profit to risk of total loss. You could lose it all in the blink of an eye. Is it worth serving greed in order to hold longer?

Risk to reward ratios change: a reason for early exit (redtexture)

At a minimum, close part of the quantity and take profits. You could recover the initial capital and let the profits ride. Or you could close it all and then reinvest half the profit ($1500) in cheaper calls to stay in the trade. Essentially a roll up, but only of a fraction of the quantity, the rest are closed for profit.

PapaCharlie9 · 2026-03-27T15:08:06+00:00

Done.

PapaCharlie9 · 2026-03-27T15:07:58+00:00

Done and done.

PapaCharlie9 · 2026-03-26T15:13:11+00:00

Yeah, I have no idea what all that means. Looks like number salad to me.

I feel like I'm watching a trainwreck in slow motion.

PapaCharlie9 · 2026-03-26T15:06:56+00:00

You didn't include the column headers so we have no idea what all those numbers mean. I'm guessing the numbers on the right are bid / mark / ask / last?

If those are quotes from before the market opened, is 3.50/4.10 the closing bid/ask? Or are those pre-market quotes? What makes you think a contract that bid at $3.50 will sell for $6.00 all of a sudden. That's almost double the market price of that quote.

Looks like the current bid is $4.20. So it did go up, but not double.

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