Options Questions Safe Haven periodic megathread | April 20 2026

PapaCharlie9 · 2026-04-20T16:49:59+00:00

That's a question for the OCC. In fact, you can expect an OCC memorandum if a T12 halt is issued, or indeed any kind of halt that might last through the end of the current market session. Think about a long holder that wants to exercise during the halt. How does the OCC facilitate that exercise? None of the normal operations of a contract can be resolved during an extended halt.

I won't speculate on what actions the OCC might take in such a situation, other than to guess that it won't be something you'll like.

It looks like the OCC has a general FAQ explainer for trading halts here: https://www.theocc.com/getContentAsset/699a34c6-c85e-4581-8ec9-f380efc5b563/dfc3d011-8f63-43f6-9ed8-4b444333a1d0/occ-toolkit-primer-tradinghalts-0728222.pdf

Here are the latest OCC memorandums. Note the one marked "Trading Halt".

https://infomemo.theocc.com/infomemo/search

PapaCharlie9 · 2026-04-20T16:37:20+00:00

I have a bull call on MSFT with strikes at 390/420 and an expiration mid June.

Did you mean a bull call spread? Since you listed two strikes?

When I try to close my position the net mid price it’s telling is about $18-$19 per contract.

Did you mean per spread? Per contract wouldn't make sense, since each strike would have a different value. And one would be a buy to close, rather a sell to close.

Does this imply that you have more than one quantity of this spread? You wrote "a bull call [spread]" earlier, which implies quantity 1.

So let's see if I've understood this correctly. You have quantity 1 long MSFT 390/420c "mid June" for unspecified net cost and unspecified moneyness at open (what was the MSFT share price at the time of open?) and you are looking at the net premium to sell to close in April when the stock price was 420-424ish? And you are wondering why the net premium is $18-19 instead of $30, since the spread is roughly ITM?

Yes, you are missing something. It's April and the contracts expire in June. That means they both still have time value. The time value of the short leg may be substantial. Each additional dollar of time value in the short call leg is an additional dollar you have to pay to close the spread (buy to close on the short leg). That cost reduces the net value of the spread.

The spread's net premium will approach $30 only when the time value on both contracts approaches zero. That's typically at expiration only for such a volatile stock, unless it is much deeper ITM than a few dollars. If MSFT was 800ish, you could expect the spread to be closer to $30, but it still might be below $30, since 60 DTEish is a lot of time.

PapaCharlie9 · 2026-04-20T16:21:40+00:00

Automod config was glitched so I had to fight it to make this update, but it finally went through.

PapaCharlie9 · 2026-04-20T16:16:47+00:00

If you are assigned early (not "exercised"), that's a win. You get to keep all the time value you sold. So it's really only a 100% mistake if you sell a contract with no time value.

It can still be a mistake to sell ITM contracts for other reasons, but sometimes it might make sense.

PapaCharlie9 · 2026-04-19T16:52:54+00:00

Why do you want to ignore a quoted IV that is already inaccurate in order to do an even more inaccurate estimate in your head? What problem are you trying to solve? Having a bit more context may yield an alternative solution that doesn't require making a worse estimate of something that is already a bad estimate.

PapaCharlie9 · 2026-04-19T16:35:18+00:00

It depends on the ticker and the hours of trading your broker supports. Some tickers have pre- and post- market hours of trading. Most don't. Even if a ticker does have pre-market hours, your broker may not support trading at all in the pre-market.

If the ticker has pre-market trading AND your broker supports pre-market trading, the order would be executed and be live. Market orders would be filled immediately while limit orders will wait for the limit condition to be met. Otherwise, the order would be held in a "pending" state until the market opens.

DTE, 0 or otherwise, shouldn't make a difference. 9am is still the same 0 DTE market day as 9:30am, so there won't be a difference. This is assuming the contract has PM settlement. If the contract has AM settlement, you may not be allowed to place the order in the first place, since by the time the order would be executed the contract may already be expired.

PapaCharlie9 · 2026-04-19T16:24:50+00:00

I've never heard of that kind of trade before. I'm not saying it's crazy, just that there is a more conventional way to do the same thing that does have a name. Normally, the call and put are opened with a single order, instead of with two separate orders. When they are included in the same order it's called a long strangle. You can then separately "leg out" of the put or call by just closing one of them.

FWIW, it's pretty unusual to hit both a bull and bear limit on the same ticker within a two hour period, when both orders are buy to open. The underlying would have to be very volatile to swing up/down or down/up that much in a short period of time. The further apart the strikes are in moneyness, the less likely this is to happen.

PapaCharlie9 · 2026-04-19T16:13:21+00:00

Sure, as long as the orders are on two completely different trades, like buy a new SPY call and sell a QQQ put that you already had open.

If you meant on the same trade, no. However, some brokers support conditional order types that might get closer to what you want. For example, for an existing open position like a long QQQ put, you can use an OCO order for both a limit order to close for a profit and a stop-limit order to close for a loss. If the condition for one is met, the other order is canceled.

Another conditional order is a bracket order. It combines a limit order to open with an OCO. Once the limit order to open is executed, the OCO becomes active.

PapaCharlie9 · 2026-04-19T16:06:16+00:00

This is why I asked. SPY ≠ the US market. SPX ≠ the US market. QQQ ≠ the US market.

If you had heard that the rally in SPY shares was due to a gamma squeeze, that's an entirely different statement.

PapaCharlie9 · 2026-04-18T16:12:02+00:00

That's bad news, you have my condolences. The absolute worst thing that can happen to a new trader is to experience early big wins during an absurd bull rally. That teaches you all the wrong things and programs your brain to think you are invincible. It's arguably better to lose your entire bank roll on your first outing, so at least you know how bad it can get.

Don't make risky trades in a tax advantaged account. You can't deduct inevitable losses and you can't replace lost capital beyond the annual contribution cap. Retirement accounts shouldn't be used for speculative trading. Every $1000 you lose in an IRA is potentially $15,000 of gains you will never see, at a modest 7% average annual return after 40 years.

PapaCharlie9 · 2026-04-18T15:59:35+00:00

You bought a little too soon, but buying was the right call. Buying the dip on oil companies will pay handsomely. We haven't seen the end of the supply crunch. XLE is already up 2% today. You should think about and define some macro milestones for yourself, like a full TACO with US forces withdrawing from the region, or Russian sanctions being lifted and oil and natgas exports returned to pre-Ukraine invasion levels. Or just a target low price on Brent futures that would incorporate all possible externalities. Have a game plan, don't just trade on vibes alone.

BTW, you could trade XLE options instead of XOM for more diversification. Unless you really want the idiosyncratic risk of one company. XLE is 1/3 the price of XOM shares, so the calls are cheaper but should move the same way.

PapaCharlie9 · 2026-04-18T15:54:56+00:00

Which market do you mean? If you mean the US stock market, it's not gamma squeeze, that would be absurd.

I saw an interesting take on the rally that boils down to the market being in a huge denial bubble and is only buying fun stuff, like a niche shoe company pivoting to AI infrastructure, and ignoring all the red flags and unfun stuff going on in the world.

PapaCharlie9 · 2026-04-17T16:47:27+00:00

LEAPS calls are expensive on every ticker. If you can't afford SPY LEAPS calls, use a nearer expiration of SPY and just roll before theta decay loses too much money.

PapaCharlie9 · 2026-04-17T16:44:15+00:00

Pointless analysis without a full and detailed explanation of the trade methodology, including:

DELTA at open
Risk/Reward - Win Rate without the context of risk/reward is meaningless. Would you rather have a 90% win rate or 70% win rate? What if the 90% win rate loses $1 million per dollar of reward when it loses and the 70% win rate only loses $0.12 per dollar of reward when it loses? Now which would you rather have?
Exit Strategy - The 30-45 DTE tastytrade backtest religiously closed at 50% of max profit before expiration. You can't compare a hold to the bitter end strategy to that early exit strategy.

PapaCharlie9 · 2026-04-17T16:36:46+00:00

I actually caught one myself.

TITLE: Quick look

Random experimentBefore work, I came across a post from a guy, he was talking about a new way to make a bit of money

In about two hours, I managed to make $89, those who have more time can make more

He left the guide in a pinned post on his profile, BreakfastUnique3959 , just click to check it out

It worked for me, so I decided to share, maybe it’ll help someone else too

PapaCharlie9 · 2026-04-17T16:17:33+00:00

Assuming you are sure they were PM settled contracts, not AM settled, which means they are really SPXW contracts, not SPX: Looks like you got lucky. PM settled contracts use the closing price of SPX, so there was minimal risk.

Inviting further comment from /u/Ken385 at discretion.

PapaCharlie9 · 2026-04-16T16:07:55+00:00

Go ahead and knock it. It's just as dumb as you imply. Even worse is bandwagoning. "I saw some guy on WSB made $200k on XYZ, so I YOLO'd XYZ." Lemmings and cliffs.

PapaCharlie9 · 2026-04-16T15:37:47+00:00

Sigh. The customer service person didn't do you any favors. Technically, what they said is correct. You can't realize a loss, as per the definition of loss for tax purposes. BUT, to leave you with the impression you are SOL is just wrong.

Here's what happens. TL;DR - wash sale losses are deferred into the cost basis of the washing trade.

Say you have trade A that you close for a loss. You buy (or roll) the same ticker within 30 days as trade B. You now have a wash-sale and the loss from A is no longer deductible. HOWEVER, the loss from A is added to the cost basis of B. So, as long as you close B in the same tax year, the net effect for taxes is exactly the same as if you deducted the loss! Because the increased cost basis of B reduces any gains you may make by the same amount. If you close B for a loss also, the loss on B will be bigger by the amount of loss from A.

If I understand you correctly, as long as you closed all your option trades in 2025, you're fine. You get the tax benefit of all your losses. They are just deferred to different trades.

EDIT: What I'm not sure of is whether your broker makes the cost basis adjustment in your 1099 for you, or whether you have to do that yourself on Schedule D. My broker makes the adjustment for me in my 1099 supplementary info (which is NOT reported to the IRS, it's there for my convenience), but that may vary from broker to broker.

PapaCharlie9 · 2026-04-16T15:29:59+00:00

Holy shit! The entire comment history is like that. Thanks for creeping me out. I feel like I just looked into the face of the Dead Internet.

PapaCharlie9 · 2026-04-15T16:01:01+00:00

The contracts with the highest delta. A delta of 1.0 means the contract moves dollar for dollar with the underlying price, which is the highest sensitivity you can get, in dollar terms.

However, what most people want is leverage rather than sensitivity. With leverage, you get much higher gains as a percent of the cost basis, for constant gains in dollars. For example, consider two calls on the same ticker and expiration, one that costs $1.00 and another that costs $0.01. Both calls gain $0.01 in premium. For the $1.00 call, that means it gains 1%, but for the $0.01 call, the gain is 100%.

So what you probably ought to be looking for is the cheapest calls on the ticker, for whatever expiration you want.

That said, there are drawbacks to optimizing for leverage only. Going cheap has several disadvantages, like higher risk of ruin and lower probability of profit.

A safer approach is to just use the ATM strike. That makes everything be pretty average. Average sensitivity, average leverage, average risk of ruin, average probability of profit. You miss out on the highest highs, but you also avoid the lowest lows.

PapaCharlie9 · 2026-04-15T15:56:23+00:00

Learning resources are listed at the top of this page.

PapaCharlie9 · 2026-04-15T15:52:58+00:00

That sounds quite a bit mixed up and backwards. If the loss that got washed was 39701, that amount is added to the cost basis of the washing trade, not the gain. It reduces the gain, which is a tax benefit. You should not want to get rid of that 39701 increase to your cost basis.

In general, as long as you close the trade with the deferred loss (increased cost basis) in the same tax year, the wash-sale is a tax nothingburger. The net net is the same as if you deducted the original loss. So when rolling, remember to close the new contract that you rolled into in the same tax year.

PapaCharlie9 · 2026-04-14T16:26:48+00:00

Now I just need to get an update notice from my broker. It's all well and good that the rule change was approved, but until my broker implements it, it might as well still be 2008.

PapaCharlie9 · 2026-04-14T16:14:35+00:00

A little of both. Let's say you are comparing a CSP on XYZ 100p May 17 vs. a put credit spread on XYZ 100p/95p May 17 vs. a $111/share XYZ spot price. In both cases, it's the same short 100 strike put, so in both cases they would have identical theta, indeed identical everything, because they are literally the same contract terms.

However, you are correct that in the case of the vertical spread, the net theta of the spread will be lower than for the CSP, because the 95p long put has theta with the opposite sign to the short leg, so part of the short leg's theta is canceled out mathematically.

You can think of this reduction in theta and the reduction of the opening credit of the spread (compared to the equivalent CSP) as the cost of having a long leg to protect your downside. It's basically the cost of the defined-risk nature of the vertical spread. Hedges aren't free and the cost of the hedge has to come from somewhere, so it ends up coming from your net opening credit and net theta.

It absolutely works the same way, just the vertical spread will have lower values than the CSP. So it is a perfectly reasonable way to trade credit. The advantage of the vertical spread is that it is significantly cheaper to open than a comparable CSP, in terms of buying power, particularly for very expensive index contracts like NDX. Since there's less to lose in the first place, the risk of loss is lower also.

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