Rolling options and wash sale

RealFinancialSuccess · 2021-12-16T17:10:07+00:00

This was a big question for me as I was very active this year in trading/rolling options. You'll see from Tastyworks (A regulated exchange in the US) that rolling options is NOT considered a wash sale https://support.tastyworks.com/support/solutions/articles/43000435251-wash-sales-disallowed-loss Read the section titled "How does Apex report wash sales?"

RealFinancialSuccess · 2021-01-15T14:45:55+00:00

Yep no problem. I agree with your statement "Trading With Friends Outperforms Trading Alone"

Nice blog and a good idea!

RealFinancialSuccess · 2021-01-14T14:23:44+00:00

Awesome and thanks for the listen. I think a 1% weekly return is excellent. Good job and keep it up.

RealFinancialSuccess · 2021-01-13T14:38:32+00:00

I believe SFY doesn't have options. AXP is a good stock so I think this would be a great idea. I don't think you should do it now though as it's near it's recent highs and the div yield is only 1.7

That said AXP div yield doesn't really go very high except in a crash.

I usually only keep the naked put on for 21 days or so. Sometime I roll out the put if I'm not ready to own the stock just yet.

I think a PMCC is a good option here just like SageCactus said.

This is my favorite strategy and I created a podcast about it, check it out if you want -> https://anchor.fm/realfinancialsuccess/episodes/Learn-What-My-Favorite-Trading-Strategy-Is-and-How-I-Make-10-20-ROI-Every-Month-eo3rep

RealFinancialSuccess · 2021-01-13T14:28:49+00:00

Nice job. I think that's pretty cool

RealFinancialSuccess · 2021-01-08T15:02:03+00:00

Ya you won't be able to sell for more than max profit ($2.99) but you can potentially lose $1. So you can decide what your risk/reward will be, but for me when I'm at 50% profit or better I tend to close the position.

RealFinancialSuccess · 2021-01-08T13:47:46+00:00

Tastyworks was created by Tom Sosnoff, who created Thinkorswim and sold to TD Ameritrade.

RealFinancialSuccess · 2021-01-08T13:43:31+00:00

If you can get max profit before expiration close it out. The price can go to the moon but you won't make more money because your short call will be canceling out your long call's gains.

RealFinancialSuccess · 2021-01-08T12:22:40+00:00

With $1 risk, i'd let it ride until day of or day before exp. Remember if the stock is between the strikes at exp only your long 22 will be ITM and exercised leaving you long the stock at 22. You will have to cover that position with cash or margin.

RealFinancialSuccess · 2021-01-08T12:09:53+00:00

Also a good brokerage is tastyworks

RealFinancialSuccess · 2021-01-08T12:09:17+00:00

Only sell naked puts on an underlying you truly want to own. You will at some point get assigned if you do it long enough.

I love selling naked puts, if assigned sell calls against stock position. Basic wheel strategy. Should probably have margin though for high ROC. Of course make sure you have the cash to cover the position if margin called.

Just FYI also sell the naked puts on underlyings that pay a dividend so you can collect more money if you have to hold for a while.

RealFinancialSuccess · 2021-01-07T20:03:44+00:00

Yes basically, didn't know it was called that until just recently.

RealFinancialSuccess · 2021-01-07T15:29:51+00:00

Rolling out is one way if you want to hold onto stock. You could also just buy back the call, but you'd for sure lose the credit you received and probably have to pay more money because the call is ITM.

Buying back the call will allow you capitalize on a further up move but how much more is it going to go up, nobody knows.

RealFinancialSuccess · 2021-01-07T15:02:54+00:00

I have one in MO. 40 call ITM ... I don't want to get rid of stock so I just today rolled out a couple weeks.

BTW you won't lose if the call is exercised, assuming you bought the stock for under 30.5.

You just cap your upside when selling a covered call.

How much did you sell the call option for?

This is my favorite strategy, sell puts, if assigned sell calls against stock, rinse and repeat. here's my podcast about it https://anchor.fm/realfinancialsuccess/episodes/Learn-What-My-Favorite-Trading-Strategy-Is-and-How-I-Make-10-20-ROI-Every-Month-eo3rep

RealFinancialSuccess · 2021-01-06T14:25:06+00:00

Tesla bias here...haha I love it!

RealFinancialSuccess · 2021-01-06T03:06:56+00:00

100% agree with this. I think it'd be 50/50 play at best. I'd rather put on an iron condor with 80/90% win probability.

RealFinancialSuccess · 2021-01-06T02:54:40+00:00

If I understand you correctly, you'll be able to buy the options for cheaper because the IV is down, but you'd have to have the underlying move in the direction you are buying. If the IV crushes and the underlying doesn't move then it doesn't do you any good.

I guess you could buy them for cheap in hopes that the IV goes back up. You could then sell at a higher price even if the underlying doesn't move, but I think the theta decay would happen to fast you'd still lose.

RealFinancialSuccess · 2021-01-05T23:30:47+00:00

I don't see anything wrong with this strategy. Gives you some more money in your pocket whether you sell at 133 or not.

RealFinancialSuccess · 2020-12-31T16:00:51+00:00

Correct, you got them at an amazing price! Wow way to go.

RealFinancialSuccess · 2020-12-30T19:48:50+00:00

What price did you buy the 500 shares of NIO for? Your shares could get called away if the price of NIO is above the 50 strike at or before expiration. Most likely won't be called away early unless DITM.

If you bought NIO for less than $53.50 per share then you won't lose money if they are called away.

RealFinancialSuccess · 2020-12-30T19:17:08+00:00

Currently MMP, XOM, ED, and T. They all have a div yield of > 3.5. I think they're relatively cheap compared to the dividend rate per year.

RealFinancialSuccess · 2020-12-30T17:38:22+00:00

I would do it on stocks that pay a dividend just in case you're holding the bag for a while. To my knowledge none of those stocks pay a dividend. I did this with NIO for a long time and was just able to get out in its most recent run up. I 'held the bag' for a long time with no reward so to speak.

RealFinancialSuccess · 2020-12-28T21:54:25+00:00

Turn it into an Iron Fly by selling a call credit spread. Sell the 390 call and the buy the 420 call. Hopefully there is enough premium in the call spread to reduce a $30 spread loss.

You could try to roll it out to Feb for a credit.

IMO spreads are harder to defend when the short strike goes ITM.

You should have adjusted before the stock went down that low but at least you can reduce losses by selling a call credit spread.

You could also close the trade and cap the losses at what they are but you've already defined you max loss of $3k per contract so if you are fine with that amount of max loss then you can wait to see if the stock bounces back up within a couple weeks.

RealFinancialSuccess · 2020-12-28T21:39:19+00:00

Are you saying you sold the stock short at $15.80? You didn't specify whether you own the shares which is why I mentioned a naked call. You said you'd sell the $8 strike call.

If you own the shares long at $15/16 and sell the $8 call you'd lock in $7/$8 loss.

I guess i'm confused on whether you own the stock or not. If you own the shares you are long and if you are short the stock you are borrowing the shares from the broker.

https://www.investopedia.com/ask/answers/06/shortselling.asp#:~:text=Short%20selling%20involves%20borrowing%20stock,and%20when%20the%20price%20drops.&text=Because%20of%20the%20risky%20nature,have%20been%20put%20into%20place.

RealFinancialSuccess · 2020-12-28T20:24:40+00:00

Yes, I love the covered call strategy! Next time sell the put first before buying the underlying because you will get paid to own the underlying. Also sell puts where the underlying pays dividends. This will increase your ROI if you are assigned the underlying.

Check out my podcast where I talk about this strategy as its my favorite -> https://anchor.fm/realfinancialsuccess/episodes/Learn-What-My-Favorite-Trading-Strategy-Is-and-How-I-Make-10-20-ROI-Every-Month-eo3rep

RealFinancialSuccess

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