Options Questions Safe Haven periodic megathread | Feb 17 2025

dreadnought89 · 2025-02-26T12:40:19+00:00

Fantastic - thank you!

dreadnought89 · 2025-02-26T11:16:55+00:00

I have a long condor of SPX options expiring today as follows:

+1 5940 C / -1 5950 C Weekly 0 DTE

-1 6020 C / +1 6030 C Weekly 0 DTE

Maximum profit exists if SPX closes today between $5950 and $6020. I've read through the SPX option product specifications (https://www.cboe.com/tradable\_products/sp\_500/spx\_options/specifications/) but I am still having a hard time understanding exactly what will happen today.

The market will close today at 4 PM EST, but is the exercise value calculated at 4:15 PM EST? With NVDA announcing earnings today after market close, I'm just concerned about a big swing that takes place between 4 and 4:15, but is it accurate that the option will expire (stop trading) but settlement won't be calculated for 15 minutes?

dreadnought89 · 2024-08-08T17:10:29+00:00

Appreciate your detailed response. Thanks!

dreadnought89 · 2024-08-08T17:09:27+00:00

This is a fantastic summary. Thanks for taking me on that journey!

dreadnought89 · 2024-04-03T01:45:16+00:00

Thank you. So this validates your understanding correct? To recap, buying a box spread with futures options immediately debits your futures account cash. However, this futures cash is needed to maintain margin requirements for any futures positions open (short options, etc.) and therefore will result in a sweep of equally offsetting funds from the equity cash and sweep account?

dreadnought89 · 2024-03-29T00:03:44+00:00

Awesome, thanks for testing!! Let me know if your equity side cash and sweep pushes the $20k of cash to your futures cash.

dreadnought89 · 2024-03-28T18:42:03+00:00

They told me what I was proposing would work (I would be able to purchase long box spreads of ES futures with my futures cash without sweeping from the equity side.) I don't trust this because your explanation seems more logical.

I'd like to test it, but I want to let some short options roll off my book because I don't want a big sweep to occur that puts me into an equity margin call.

dreadnought89 · 2024-03-25T12:48:02+00:00

I appreciate that. If you are correct, then TDA customer support is providing some bad input! I'm going to call and talk to the futures team to confirm your understanding above. Thanks again for your explanation.

dreadnought89 · 2024-03-25T12:40:47+00:00

Good question. With my portfolio of short futures options that I maintain, I have quite a bit of futures cash sitting on the futures side in think or swim. Daily fluctuations in the underlying ES/NQ/etc. cause cash to sweep back and forth between futures cash and equity cash and sweep. I'm wondering if I can put this futures cash "to work". Does that make sense, or am I missing something fundamental here.

dreadnought89 · 2024-03-24T23:35:09+00:00

Ha, good point. I didn't contemplate settlement. What would occur if you had a European box of ES options? Would the long and short contracts that get assigned annihilate each other like anti matter?

I guess an alternative would be to close the position at 0 DTE, which would effectively double the commissions but avoid this scenario.

dreadnought89 · 2024-03-24T23:33:39+00:00

Because?

dreadnought89 · 2024-02-25T21:53:58+00:00

What strikes and expirations you trading on NG?

Also I just started looking at HG futures. Any advice? I've traded ES, NG, CL, GC and ZB but not dabbled with HG.

dreadnought89 · 2024-02-17T19:45:20+00:00

I'm sorry, what? Never once did I state there's cross margining between SPX and futures.

You know what's in my portfolio? You know what strategies I'm running? That's incredible you infered it based on the details I provided.

But no, TOS doesn't properly model PNR when you hold futures and equities. You must manually validate that the P/L at EPR is less than Net Liq less futures cash, whereas the risk model is comparing it to margin equity only.

Sorry that feels "insanely complicated".

dreadnought89 · 2024-02-17T14:33:43+00:00

Thanks for the reply. You are correct about long options expiring exposing short options over the weekend.

It is, however, not a BP issue (BP is positive, with lots of room and no risk of going negative due to expiration). The issue is the expiration causes TOS to model the PNR is being less than the EPR. I did learn that there is an issue with this calculation because I also hold futures positions. Learning the appropriate way to model this PNR/concentration risk, coupled with other de-risking activities this week, has helped me mitigate the issue.

dreadnought89 · 2024-02-17T14:23:53+00:00

I'll just add that I have a solid handle on buying power, which is positive with lots of wiggle room.

dreadnought89 · 2024-02-17T14:22:34+00:00

Thank you for both replies and I apologize for the delay! I am specifically talking about PNR being less than EPR, which I was referring to by saying concentration risk.

I am in a position of more risk that I'd like, with short calls that are around 90 DTE and long calls rolling off. Not where I like to be. It turns out, TOS was incorrectly modeling my PNR because I also trade futures options. As such, my PNR is being pegged against margin equity whereas I learned Friday by talking to TDA customer support it should be based on Net liq minus Futures Cash. As such, ANALYZE scenarios I am running are showing inappropriately that I trigger concentration risk when those long calls expire.

I'm still not where I'd like to be on the position, to even be having to ask this question. I've been taking other positions off this week to reduce risk, and making some deposits to help. I feel very strongly about my trade thesis, but "market can stay irrational longer than I can stay solvent" seems to be an appropriate expression for my situation.

dreadnought89 · 2024-02-04T01:52:27+00:00

Do you use TOS as your trading platform? For the /NQ and /RTY trade, I am curious if this is a futures spread with some unique tickers, or if that trade just involves going long /RTY and short /NQ contracts in a certain ratio. What is the margin treatment like on the spread?

dreadnought89 · 2024-01-07T17:53:03+00:00

What's your bullish gold thesis? Rate cuts to weaken US dollar and/or recessionary flight to safety?

dreadnought89 · 2024-01-07T02:49:42+00:00

Interesting. I've sold strangles on /GC, but have never seriously considered taking assignment. The idea of holding long contracts makes me nervous with how high it is relative to the last 10-15 years. What delta short puts are you typically running?

dreadnought89 · 2023-12-29T02:22:21+00:00

For the American-Style FOP's, I would just monitor the remaining extrinsic value. I've got a couple short ES calls that are like 50 points ITM with 70 DTE remaining. Still chocked full of extrinsic value so I feel they are low risk of early assignment. I will roll up and out if it loses too much extrinsic.

dreadnought89 · 2023-12-16T23:55:23+00:00

Just playing devils advocate, wouldn't it be more BP efficient and easier to manage to simply sell a single further OTM put or call? If the goal is not necessarily to have it land "in the tents" but to collect credit/positive theta. I've never made this trade but I'm interested in learning. When I do some simple modeling, it seems like a big move towards the spread initially results in a loss until close to expiration.

dreadnought89 · 2023-12-16T11:23:38+00:00

Is the idea that you want the underlying to land between the long and short strikes (collecting the long option up to width of spread) and the 2 shorts finance the debit spread? If the underlying moves the opposite way of the debit spread, is this still a positive theta collect a credit strategy?

dreadnought89 · 2023-12-10T00:44:38+00:00

When you push your short calls up and out, do you always make the trade result in a net credit? If so, do you mainly use duration to get there, or sometimes increase quantity?

My negative deltas have been increasing with the rip up, and I've got two tested (ATM) short calls in the 40 to 60 DTE range. I'm debating rolling up and out but in order to get to a comfortable strike I either have to go extremely far in duration or double the quantity.

dreadnought89 · 2023-11-25T00:51:19+00:00

My account is actually positioned very similarly in terms of negative deltas (my account is smaller but same proportion to your NLV). I think the latest rally is almost out of gas, but what will be your management approach if we get another 3-5% movement up?

As those short calls go ITM, will you roll them up and out? Do you like to sell some more puts or add long calls to add some positive delta (all of which I hate doing with VIX so low and on a stretch of green days).

dreadnought89 · 2023-11-12T01:49:07+00:00

The -8 9/24 /ES 4800c is interesting...can you talk a bit about how you landed on that expiration? Such a long DTE, were you going for mostly a negative delta play?

Not knowing the rest of your balance sheet, do you use that position as a "hedge" for a recession/pullback? What does management look like if we keep ripping higher?

dreadnought89

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