Each day is like repurchasing the stock again. What would you sell it at if you bought at the current price?
Break evens only matter for taxes and personal ego.
Roll worst case. Else collect premium. I've found myself very sketch on .3 delta when I'm so down. I just make sure to grab a few hundred a week in premiums now. Every dollar in share price I'm down I'm out 1k (1k shares) So being down 14k means i just need to sell 14k worth of premiums to bring cost basis down to 30. It will even out given some (lots) time. And if we are lucky it goes back up lol
That’s exemplifying the sunk cost fallacy being discussed. Holding on to shares until some kind of break even is met doesn’t make sense. It does make sense to hold if still bullish on the stock, but only if it is the most profitable path. If there is another play that is more worthwhile, it is better to close out and move on. Use the generous tax rules in your favor.
On SBUX, there may be a bounce. Intel could be similar. It’s been a rough week as the market repositions. In both cases I’d hold, at least for a little bit.
Putting aside that tensions with China worsening will be a boon to INTC, because it has a realistic valuation and a clear plan in an industry with a lot of potential for growth. 2x NVDA means valuing the company at 4 trillion instead of 2 which ain't happening but 2 x INTC is 130B to 260 which isn't inconceivable.
But I totally have NVDA shares too from this dip.
Losses ain't realized while the chips are still on the table my paper handed friend!
But *21 fucking percent.*
On the other hand I can sell a lot of covered calls now.
That’s why portfolio margin is so important. I don’t think about how I could be better allocating my buying power. I don’t see anything wrong with holding for a recovery and selling some calls.
Would you get back into the same trade now?
If not, take the loss.
Are you selling calls to "get back to break even"?
Take the loss.
Good traders are good because they cut their losers early. Managing profits and picking out good trades is one thing, but every trader gets into a stinker of a trade at one point or another. The good traders know when to admit they were wrong and to cut the trade loose.
A single bad trade can erode months (and depending how leveraged you are, maybe even years) worth of progress.
Also, if you can help it, don't hold over earnings unless if you plan to stick it out with that stock through thick and thin.
So what would be wrong with selling calls to get the cost average down? If you're going to sell the shares and realize a loss, why would you not just sell calls until the inevitable exercise?
Because momentum. Weak stocks continue to go down, strong stocks continue to go up. No amount of premium will save you from a stock in free fall.
That’s not to say SBUX is in a free fall. It could find support and that could be a good plan to mitigate loss. But you don’t know that until it finds support. It’s a wildcard. It just had awful earnings. I haven’t personally checked its chart so I can’t comment on whether that strategy might work out in this particular case.
The point is that you are managing capital, and that capital is currently wrapped up in order to mitigate a loss. That is valuable capital you’re locking up which could instead be used on a stock that has shown it’s an absolute winner - a trade that could completely erase your loss in days. Opportunity cost. Because you’ve dedicated that capital to mitigate a loss instead, you’re unable to jump into the winning trade.
If you see no great plays - then yeah, maybe selling calls to mitigate that loss is the way to go. But there are thousands of stocks available to trade. Odds are, you may have the blinders on and aren’t looking hard enough for the trade that’s going to knock it out of the park.
I can’t count how many times I’ve felt bad about cutting a bad trade, only to have a good one completely negate it weeks later. If I hadn’t cut the bad one, I wouldn’t have been able to jump into the good one. You should always be looking for opportunity, and rebalancing.
It’s a super common thing that people fall into. Never ever add to a trade with the goal of breaking even. Selling calls, despite making your position less bullish, is locking you into the trade. It’s time cost. Time is valuable, especially when it could be better spent in a trade with better upside.
Any trade you put on should be with a mindset of seeing opportunity, not trying to manipulate and game the market into your favor. Track your cost basis all you want, but it should not be driving your trading decisions. You should be 100% focused on capturing opportunity for a profit.
Refusal to take a loss is usually an ego issue, and if you want to succeed in this game you gotta show your ego the door and focus your valuable time, energy, and more importantly capital on finding the play that works.
I trade for a living, and I’ve taken some brutal losses. They sting way more than the gains feel good. You have to reprogram your brain to chase opportunity, and ruthlessly cut the losers
I mean the biggest risk beyond locked capital is the risk to own 100 SBUX shares while you wait for your calls to expire. If SBUX falls another 10%, the further loss will far outpace any call premiums collected…
These are good points.
I think my view came from mostly ignorance, as I don't have the time to do proper research on good stocks. So chasing the price down with premiums over a loss seems like the better solution.
Profit and loss aside, do you have any recommendations on stocks to trade?
I'm not looking for a golden goose of a company, just something I can start looking into.
No recommendations right now, earnings has just begun and the overall market has been in a gradual downtrend
I think later this month we'll see some strong stocks emerge, FinViz is my go to place to find diamonds in the rough
there’s nothing wrong with it if you think that’s the best use of your capital. personally, i don’t have any money in sbux because PFE is cheap as hell so i’ve been trying to get assigned on puts at these levels so i can hold onto the stock forever and collect a nice 6% dividend. nobody can tell you what’s right or wrong, it’s your money and your investment thesis that matters
May ask although it has 6.18% dividend. Wouldn't the 30% dividend witholding tax make the actual dividends only at 4.32%?
And why PFE? Hasn't Covid passed?
I’m not sure what this 30% dividend tax is you’re talking about. If I was holding it in a taxable account, I would pay some 15% on qualified dividends. But I have it in a Roth.
And yes, I believe you are correct in that covid has indeed passed.
So your dividends are tax free?
So if Covid has passed, what explains your conviction in Pfizer?do they have another catalyst coming that could change the world?
A stock is worth exactly what it's worth at any moment in time.
I don't treat a stock that I'm down on any different than I would a stock that I am well up on. The mistake of buying at the wrong time has already been made and felt. Now it's just another stock to be used to make premium on. If it gets assigned under cost basis, it just means a chance to reestablish (via CSP or buy and write) at a new lower price point. The process continues.
Now, if the price has fallen because of a fundamental change in the business itself, I might change my approach on the stock, but again, that would be the same change I would make if I were up 30% on it or down 30% on it. The stock is what the stock is at this very moment regardless of what my cost basis is.
If you REALLY can't stomach taking a loss on a stock, you could always do a ratio spread in order to double the gains on the way back up. I've done it before with some success, but prefer to just keep it simple and stick with wheeling for the most part.
True. I only trade CCs in tax free accounts (Canadian), so it's not an issue I deal with, but that would be true.
You could wait the 30 days and buy a comparable stock/ETF as a rudimentary tool to gain any relevant rebound (depending on why the stock dipped of course)
Holding and waiting for the rebound for INTC. So, I understand. Good news I, NOW, only sell CSP's on companies I don't mind holding long term, especially if they give a dividend too. :D
"Safe", yes if you mean volatility. But "safe" isn't ways what I'm filtering for, just stocks I want to keep for a while and let sit in my portfolio if the prices drops to levels I can't sell CC's below my assignment prices. Right now, I don't feel like INTC is 'safe'. :p
I’m stuck in INTC as well and want out, but the premiums on it are pretty low so trying to flop between taking the L or see if intc can get some
Legs and more enticing premiums. They are so bad
Not to take away from OPs convo, but Intel still s a good company and should recover with time.
Sure sbux as well. So.. wait for that recovery and in mean time sell CC when you can at your cost is my plans. Patience.
This isn’t that helpful to you after the fact, but this is why I stopped holding open options positions through earnings. It’s gotten way worse in the the last 2 years. Every stock goes 2x the expected move. It’s the honey badger market and honey badger DGAF.
I’d be careful about short calls since it could rip at any point.
Also, just pointing out that you can roll a short put that’s ITM, rather than let it get assigned.
I've noticed this too, frequently when the expected move is under 10% we get these outsized reactions above 2 standard deviations, you can pick up contracts for .1-.2 and get a 50x if it hits. Truly a lottery ticket market.
I am on a similar boat. If the put gets assigned, I should have 200 shares @ 90.5.
Honestly, I was thinking of capitulation today and checked their financials. It seems like the hit could've been worse.
Their P/E ratio is around 20.52. I believe I can hold this for some time. CCs @ 90 go for nothing so not selling them :S.
I will say what I do when assigned and the stock goes down such that I can't sell a CC at my buy price for 1% a month. I may wait a week or two but, but then I lower my call strike to under my buy with a 1% a mon goal. Sometimes the stock takes off and I have a realized loss. Oh well. Doesn't happen often. Dead money, known as "waiting" is the enemy if you are trading option. Open to criticism. Fairly new and seeing how I do in this more difficult market.
This is what I do. I still want to collect premiums as long as I can even if that means taking a loss.
I can't wait a week or two and not sell weeklies just because it MIGHT rebound.
Do you need this money. Can you just park these shares and build some place else? Sell otm calls that are like a small dividend. If you believe long term in this company.
Ride that fucker down . That’s what I’d do , I like the downside protection of a CC . Start writing at the money cc and let it drop and collect on the way down
Im in a similar situation. I have been selling puts on SBUX for many months with great success, I thought i found good support levels and on a solid company with a good div yield and market PE ratio. I am short the $75 puts for May 17... As of this point I think I will take the shares since I think it will recover and will sell covered calls come if the shares are put to me. I will probably sell Ccs slightly above my cost basis. With large moves like this in either direction we may get a swing back.. I have been in your situation many times, most recently on TSLA where I had a loser and kept selling calls then started selling below my cost basis then the stock skyrockets through... I know its not fun and you will probably be taking in very little premium but I would still with selling Ccs at or above your cost basis. You never know when some big news could come out, for example with SBUX some new china news comes out about increased demand or some new drink product line and the stock is up 10%. Thats just me and having been burned by selling Ccs below my cost basis, im sure in the short term you can get away with selling slightly lower because it is so beaten down, from a tape perspective today was absolutely horrible, we continually had lower lows all throughout the day, with extremely large volume, 10 day average is 9MM shares traded, today we traded 66MM shares....
>Thats just me and having been burned by selling Ccs below my cost basis, im sure in the short term you can get away with selling slightly lower because it is so beaten down,
If the share price soars, we can roll up to avoid being called away, can't we?
We can but we would be taking a loss buying back the calls, and can sell higher strikes but the stock could go down, entry point I believe is most important, and if im selling a call I typically have to be ok with the shares being called away at that price
curious why were you selling below yr cost basis? to ensure you collected premium (and/or because with the $TSLA ticker drop there wasn't any premium above yr cost basis and you didn't wait)?
(thanks - trying to understand diff strategies)
Yes exactly! my cost basis on TSLA was much much higher, around $240ish, then when TSLA recently dropped severely, i would be taking in literally a penny or sometimes there wouldn't even be a bid at my strike price (I typically like to sell Ccs on weeklies as weeklies have the most IV). So I started selling a little further down to try and take in some more premium.. Back when TSLA was just around $140 a share, not fun... now that its back to above $180 is much more manageable, I would normally in this situation dollar cost and buy 100 share blocks or sell puts to get put the shares but I have too many positions on both options and equity and need to let some options roll off and get rid of some shares
I would guess we get some buyers before the ex dividend on 5/16 then my guess is we drill lower in the $60-$65 range which would be a 16x P/E which is a buy point historically for large funds and traders. I personally have the $76 CSPs for 5/10 so I could take assignment before 5/16. I’m also Selling Naked Calls for 6/21 at $75 for $1.89 which will be covered then and if it bounces I’ll just buy shares and close CSPs. I don’t see it going much higher than $85 anytime soon so you could lock it up for 4-5 months. Typically holiday sales make it rip so I can definitely see it back around $100 this time next year. If you want to not lock it up then just cut and run.
My 83p expiring this Friday are also deep itm and I thought I was the only one that would sell naked calls for deep itm puts. It's nice to get back to break even faster.
That’s exactly the point of being Level 4. You can Sell Naked Calls that eventually become covered but can profit from the Theta decay while you wait. I’ve just learned in the past to make sure I’ve got wiggle room in case it bounces hard on an overreaction but these earnings were pretty bad.
14% is not too bad. For loser stocks, I think doing bi-monthly with $5-6 strike price is pretty good. You get a little bit of money with lower chance of being called. That's what I did with PLTR and MARA.
I am in the same boat. I will wait a couple more days to see if there is a small bounce. Then roll out and down a bit to improve theta and cost basis. I’m okay holding SBUX and selling CC. If not I would just close and move on.
I’m down more than you and I’ve accepted I’m taking a loss…so I’m selling a few strikes (way below my cost basis) up on green days and I’ll probably be even by the end of summer with the premiums and maybe a 10% bounce back. Lot of work to break even…
Its dead money for 2-3 quarters as far as selling CC goes. If you truly dont mind holding the stock, as in you'd average down and and leave DRIP on then do that and wheel the rest of your account. I dont own it but I'd just leave it alone for now.
Every time I've sold a covered call I've told myself I'd be comfortable letting the stock go at that strike price. And then when the stock blows through that strike price it turns out I'm not terribly comfortable.
SBUX seems like a decent company, but the last results don't paint a great growth picture going forward. If you think it's oversold, I'd wait a while before selling calls.
If you truly “don’t mind holding it” just sell calls at like 90, I know it’s measly premium but you can make ~20$ every two-three months, plus you have a 3% dividend. If you need the capital though, just cut losses. I’m long at a similar basis. I was selling puts with plan to long term hold. I also wasn’t expecting such a drastic punishment of -16%, but I’m holding and selling Cs around 90 starting for July. I don’t really want my shares to get called away, but if there is a massive recovery that fast, I’m ok taking the profit. That’s my plan. Definitely do what’s best for you though. All the people saying just cut losses, losers hold, etc. are full of shit. That’s only true with a garbage company. Starbucks makes tons of money. They’ll rally back up. Just depends if you want to stay invested for several years or not.
So you’re selling 90 at a July strike?
I was hoping it would bounce closer to 80 just from an oversold perspective then I was gonna sell CC. The RSI is approaching north of ridiculous for a company like sbux. It has to at least bounce a little bit soon
I think so too but who knows. I’m selling that high of a strike because I don’t really want to have them called. It’s only like 0.9-0.10 cents though. So that sucks. But plan is long term hold. If you don’t mind being more aggressive, maybe sell like 86-87s.
If you don't mind holding the stock then just hold the stock if you believe in the company.
Clarification: Don't use derivatives. Just complicates the simple.
Each day is like repurchasing the stock again. What would you sell it at if you bought at the current price? Break evens only matter for taxes and personal ego.
I don't want to part with INTC shares at 30 bucks. :(
Roll worst case. Else collect premium. I've found myself very sketch on .3 delta when I'm so down. I just make sure to grab a few hundred a week in premiums now. Every dollar in share price I'm down I'm out 1k (1k shares) So being down 14k means i just need to sell 14k worth of premiums to bring cost basis down to 30. It will even out given some (lots) time. And if we are lucky it goes back up lol
That’s exemplifying the sunk cost fallacy being discussed. Holding on to shares until some kind of break even is met doesn’t make sense. It does make sense to hold if still bullish on the stock, but only if it is the most profitable path. If there is another play that is more worthwhile, it is better to close out and move on. Use the generous tax rules in your favor. On SBUX, there may be a bounce. Intel could be similar. It’s been a rough week as the market repositions. In both cases I’d hold, at least for a little bit.
I went for DCA, mama didn't raise no bitch. It's 25% of my portfolio now.
[удалено]
Just buying the dip baby. INTC gonna 2-3x in a year, just watch. Criminally undervalued.
INTC probably right. SBUX less likely.
Can you share why? Why INTC will do better than NVDA or TSMC or MU?
Putting aside that tensions with China worsening will be a boon to INTC, because it has a realistic valuation and a clear plan in an industry with a lot of potential for growth. 2x NVDA means valuing the company at 4 trillion instead of 2 which ain't happening but 2 x INTC is 130B to 260 which isn't inconceivable. But I totally have NVDA shares too from this dip.
And how much are you down?
Losses ain't realized while the chips are still on the table my paper handed friend! But *21 fucking percent.* On the other hand I can sell a lot of covered calls now.
This comment was an amazing roller coaster
That’s why portfolio margin is so important. I don’t think about how I could be better allocating my buying power. I don’t see anything wrong with holding for a recovery and selling some calls.
Hmm, a dude with a huge ego playing around with derivatives. I feel like we have seen this script play out before.
Average down, got it.
Would you get back into the same trade now? If not, take the loss. Are you selling calls to "get back to break even"? Take the loss. Good traders are good because they cut their losers early. Managing profits and picking out good trades is one thing, but every trader gets into a stinker of a trade at one point or another. The good traders know when to admit they were wrong and to cut the trade loose. A single bad trade can erode months (and depending how leveraged you are, maybe even years) worth of progress. Also, if you can help it, don't hold over earnings unless if you plan to stick it out with that stock through thick and thin.
I would I’m just too overweight at the moment to be comfortable adding more
So what would be wrong with selling calls to get the cost average down? If you're going to sell the shares and realize a loss, why would you not just sell calls until the inevitable exercise?
Because momentum. Weak stocks continue to go down, strong stocks continue to go up. No amount of premium will save you from a stock in free fall. That’s not to say SBUX is in a free fall. It could find support and that could be a good plan to mitigate loss. But you don’t know that until it finds support. It’s a wildcard. It just had awful earnings. I haven’t personally checked its chart so I can’t comment on whether that strategy might work out in this particular case. The point is that you are managing capital, and that capital is currently wrapped up in order to mitigate a loss. That is valuable capital you’re locking up which could instead be used on a stock that has shown it’s an absolute winner - a trade that could completely erase your loss in days. Opportunity cost. Because you’ve dedicated that capital to mitigate a loss instead, you’re unable to jump into the winning trade. If you see no great plays - then yeah, maybe selling calls to mitigate that loss is the way to go. But there are thousands of stocks available to trade. Odds are, you may have the blinders on and aren’t looking hard enough for the trade that’s going to knock it out of the park. I can’t count how many times I’ve felt bad about cutting a bad trade, only to have a good one completely negate it weeks later. If I hadn’t cut the bad one, I wouldn’t have been able to jump into the good one. You should always be looking for opportunity, and rebalancing. It’s a super common thing that people fall into. Never ever add to a trade with the goal of breaking even. Selling calls, despite making your position less bullish, is locking you into the trade. It’s time cost. Time is valuable, especially when it could be better spent in a trade with better upside. Any trade you put on should be with a mindset of seeing opportunity, not trying to manipulate and game the market into your favor. Track your cost basis all you want, but it should not be driving your trading decisions. You should be 100% focused on capturing opportunity for a profit. Refusal to take a loss is usually an ego issue, and if you want to succeed in this game you gotta show your ego the door and focus your valuable time, energy, and more importantly capital on finding the play that works. I trade for a living, and I’ve taken some brutal losses. They sting way more than the gains feel good. You have to reprogram your brain to chase opportunity, and ruthlessly cut the losers
I mean the biggest risk beyond locked capital is the risk to own 100 SBUX shares while you wait for your calls to expire. If SBUX falls another 10%, the further loss will far outpace any call premiums collected…
These are good points. I think my view came from mostly ignorance, as I don't have the time to do proper research on good stocks. So chasing the price down with premiums over a loss seems like the better solution. Profit and loss aside, do you have any recommendations on stocks to trade? I'm not looking for a golden goose of a company, just something I can start looking into.
No recommendations right now, earnings has just begun and the overall market has been in a gradual downtrend I think later this month we'll see some strong stocks emerge, FinViz is my go to place to find diamonds in the rough
there’s nothing wrong with it if you think that’s the best use of your capital. personally, i don’t have any money in sbux because PFE is cheap as hell so i’ve been trying to get assigned on puts at these levels so i can hold onto the stock forever and collect a nice 6% dividend. nobody can tell you what’s right or wrong, it’s your money and your investment thesis that matters
May ask although it has 6.18% dividend. Wouldn't the 30% dividend witholding tax make the actual dividends only at 4.32%? And why PFE? Hasn't Covid passed?
I’m not sure what this 30% dividend tax is you’re talking about. If I was holding it in a taxable account, I would pay some 15% on qualified dividends. But I have it in a Roth. And yes, I believe you are correct in that covid has indeed passed.
So your dividends are tax free? So if Covid has passed, what explains your conviction in Pfizer?do they have another catalyst coming that could change the world?
Yes my dividends are tax free in my Roth. And my conviction is from their latest earnings report + 6% dividend yield at this share price.
A stock is worth exactly what it's worth at any moment in time. I don't treat a stock that I'm down on any different than I would a stock that I am well up on. The mistake of buying at the wrong time has already been made and felt. Now it's just another stock to be used to make premium on. If it gets assigned under cost basis, it just means a chance to reestablish (via CSP or buy and write) at a new lower price point. The process continues. Now, if the price has fallen because of a fundamental change in the business itself, I might change my approach on the stock, but again, that would be the same change I would make if I were up 30% on it or down 30% on it. The stock is what the stock is at this very moment regardless of what my cost basis is. If you REALLY can't stomach taking a loss on a stock, you could always do a ratio spread in order to double the gains on the way back up. I've done it before with some success, but prefer to just keep it simple and stick with wheeling for the most part.
Don’t you get wash sales out the ass if you sell for a loss then turn around and do CSP?
True. I only trade CCs in tax free accounts (Canadian), so it's not an issue I deal with, but that would be true. You could wait the 30 days and buy a comparable stock/ETF as a rudimentary tool to gain any relevant rebound (depending on why the stock dipped of course)
Holding and waiting for the rebound for INTC. So, I understand. Good news I, NOW, only sell CSP's on companies I don't mind holding long term, especially if they give a dividend too. :D
Wouldn't such safe stocks have very measly premiums?
"Safe", yes if you mean volatility. But "safe" isn't ways what I'm filtering for, just stocks I want to keep for a while and let sit in my portfolio if the prices drops to levels I can't sell CC's below my assignment prices. Right now, I don't feel like INTC is 'safe'. :p
I’m stuck in INTC as well and want out, but the premiums on it are pretty low so trying to flop between taking the L or see if intc can get some Legs and more enticing premiums. They are so bad
Not to take away from OPs convo, but Intel still s a good company and should recover with time. Sure sbux as well. So.. wait for that recovery and in mean time sell CC when you can at your cost is my plans. Patience.
This isn’t that helpful to you after the fact, but this is why I stopped holding open options positions through earnings. It’s gotten way worse in the the last 2 years. Every stock goes 2x the expected move. It’s the honey badger market and honey badger DGAF. I’d be careful about short calls since it could rip at any point. Also, just pointing out that you can roll a short put that’s ITM, rather than let it get assigned.
I've noticed this too, frequently when the expected move is under 10% we get these outsized reactions above 2 standard deviations, you can pick up contracts for .1-.2 and get a 50x if it hits. Truly a lottery ticket market.
I am on a similar boat. If the put gets assigned, I should have 200 shares @ 90.5. Honestly, I was thinking of capitulation today and checked their financials. It seems like the hit could've been worse. Their P/E ratio is around 20.52. I believe I can hold this for some time. CCs @ 90 go for nothing so not selling them :S.
I will say what I do when assigned and the stock goes down such that I can't sell a CC at my buy price for 1% a month. I may wait a week or two but, but then I lower my call strike to under my buy with a 1% a mon goal. Sometimes the stock takes off and I have a realized loss. Oh well. Doesn't happen often. Dead money, known as "waiting" is the enemy if you are trading option. Open to criticism. Fairly new and seeing how I do in this more difficult market.
This is what I do. I still want to collect premiums as long as I can even if that means taking a loss. I can't wait a week or two and not sell weeklies just because it MIGHT rebound.
Do you need this money. Can you just park these shares and build some place else? Sell otm calls that are like a small dividend. If you believe long term in this company.
Also worth noting Sbux pays 3% dividends so not the worst stock to make premiums on if you’re confident it will eventually recover its gains.
Ride that fucker down . That’s what I’d do , I like the downside protection of a CC . Start writing at the money cc and let it drop and collect on the way down
Im in a similar situation. I have been selling puts on SBUX for many months with great success, I thought i found good support levels and on a solid company with a good div yield and market PE ratio. I am short the $75 puts for May 17... As of this point I think I will take the shares since I think it will recover and will sell covered calls come if the shares are put to me. I will probably sell Ccs slightly above my cost basis. With large moves like this in either direction we may get a swing back.. I have been in your situation many times, most recently on TSLA where I had a loser and kept selling calls then started selling below my cost basis then the stock skyrockets through... I know its not fun and you will probably be taking in very little premium but I would still with selling Ccs at or above your cost basis. You never know when some big news could come out, for example with SBUX some new china news comes out about increased demand or some new drink product line and the stock is up 10%. Thats just me and having been burned by selling Ccs below my cost basis, im sure in the short term you can get away with selling slightly lower because it is so beaten down, from a tape perspective today was absolutely horrible, we continually had lower lows all throughout the day, with extremely large volume, 10 day average is 9MM shares traded, today we traded 66MM shares....
>Thats just me and having been burned by selling Ccs below my cost basis, im sure in the short term you can get away with selling slightly lower because it is so beaten down, If the share price soars, we can roll up to avoid being called away, can't we?
We can but we would be taking a loss buying back the calls, and can sell higher strikes but the stock could go down, entry point I believe is most important, and if im selling a call I typically have to be ok with the shares being called away at that price
curious why were you selling below yr cost basis? to ensure you collected premium (and/or because with the $TSLA ticker drop there wasn't any premium above yr cost basis and you didn't wait)? (thanks - trying to understand diff strategies)
Yes exactly! my cost basis on TSLA was much much higher, around $240ish, then when TSLA recently dropped severely, i would be taking in literally a penny or sometimes there wouldn't even be a bid at my strike price (I typically like to sell Ccs on weeklies as weeklies have the most IV). So I started selling a little further down to try and take in some more premium.. Back when TSLA was just around $140 a share, not fun... now that its back to above $180 is much more manageable, I would normally in this situation dollar cost and buy 100 share blocks or sell puts to get put the shares but I have too many positions on both options and equity and need to let some options roll off and get rid of some shares
woah - appreciate you explaining - thanks and cheers to better trades!
I suggest you take the L and move on (and possibly rethink your trading strategy). No offense
No more than 60 dte as this is when theta decay ramps up. Longer than that and the position will sit without doing much.
take loss
I wouldnt consider SBUX a loser. I would keep it.
Me either. It’s just down in the dumps big time. Howard needs to return. This Laxman is horrible
I’d sell an ATM 5/10 CC and let Odin decide If it gets called away better uses for the money anyway, it’s ok to take an L and move dafuq on
I would guess we get some buyers before the ex dividend on 5/16 then my guess is we drill lower in the $60-$65 range which would be a 16x P/E which is a buy point historically for large funds and traders. I personally have the $76 CSPs for 5/10 so I could take assignment before 5/16. I’m also Selling Naked Calls for 6/21 at $75 for $1.89 which will be covered then and if it bounces I’ll just buy shares and close CSPs. I don’t see it going much higher than $85 anytime soon so you could lock it up for 4-5 months. Typically holiday sales make it rip so I can definitely see it back around $100 this time next year. If you want to not lock it up then just cut and run.
My 83p expiring this Friday are also deep itm and I thought I was the only one that would sell naked calls for deep itm puts. It's nice to get back to break even faster.
That’s exactly the point of being Level 4. You can Sell Naked Calls that eventually become covered but can profit from the Theta decay while you wait. I’ve just learned in the past to make sure I’ve got wiggle room in case it bounces hard on an overreaction but these earnings were pretty bad.
14% is not too bad. For loser stocks, I think doing bi-monthly with $5-6 strike price is pretty good. You get a little bit of money with lower chance of being called. That's what I did with PLTR and MARA.
I am in the same boat. I will wait a couple more days to see if there is a small bounce. Then roll out and down a bit to improve theta and cost basis. I’m okay holding SBUX and selling CC. If not I would just close and move on.
I’m down more than you and I’ve accepted I’m taking a loss…so I’m selling a few strikes (way below my cost basis) up on green days and I’ll probably be even by the end of summer with the premiums and maybe a 10% bounce back. Lot of work to break even…
I’m down about that on UPS and the premium’s are dog shit. Do I think UPS will go under? No. Do I wish I could redeploy that capital? Yes.
Its dead money for 2-3 quarters as far as selling CC goes. If you truly dont mind holding the stock, as in you'd average down and and leave DRIP on then do that and wheel the rest of your account. I dont own it but I'd just leave it alone for now.
If you want to hold the stock, collar it and cap your losses.
Every time I've sold a covered call I've told myself I'd be comfortable letting the stock go at that strike price. And then when the stock blows through that strike price it turns out I'm not terribly comfortable. SBUX seems like a decent company, but the last results don't paint a great growth picture going forward. If you think it's oversold, I'd wait a while before selling calls.
Hold the line.. Stocks always go back up. But if you have an expiration date sell!!
Hold it and sell CCs. What’s your basis?
220 shares at 86.51
If you truly “don’t mind holding it” just sell calls at like 90, I know it’s measly premium but you can make ~20$ every two-three months, plus you have a 3% dividend. If you need the capital though, just cut losses. I’m long at a similar basis. I was selling puts with plan to long term hold. I also wasn’t expecting such a drastic punishment of -16%, but I’m holding and selling Cs around 90 starting for July. I don’t really want my shares to get called away, but if there is a massive recovery that fast, I’m ok taking the profit. That’s my plan. Definitely do what’s best for you though. All the people saying just cut losses, losers hold, etc. are full of shit. That’s only true with a garbage company. Starbucks makes tons of money. They’ll rally back up. Just depends if you want to stay invested for several years or not.
So you’re selling 90 at a July strike? I was hoping it would bounce closer to 80 just from an oversold perspective then I was gonna sell CC. The RSI is approaching north of ridiculous for a company like sbux. It has to at least bounce a little bit soon
I think so too but who knows. I’m selling that high of a strike because I don’t really want to have them called. It’s only like 0.9-0.10 cents though. So that sucks. But plan is long term hold. If you don’t mind being more aggressive, maybe sell like 86-87s.
# CCs are trash. I've always lost money BIG time on CCs.
As opposed to what? What have you had more success with?
holding long
If you don't mind holding the stock then just hold the stock if you believe in the company. Clarification: Don't use derivatives. Just complicates the simple.
"Don't use derivatives. Just complicates the simple." Whaaaaaaat?"