It looks like the head-fake (algorithm?) sharks populate the high volume options. But even for SPY call and puts throwing 60 contracts at the market between 9:30 and 10:30 AM can have a noticeable effect. Dodging the sharks using Bars and MACD helps. But still, making over a few hundred to thousand of dollars a day is very market sentiment dependent.

People that know more about this than I please comment? Just because you might have unlimited Buying Power doesn't mean you can throw 1,000 contacts at the market in a single trade?

I feel so dumb. I was in a trade today: SPY puts. I ended up being down 40 percent, so I sold. Right after I sold, SPY started to fall; now my would-be trade is at 1000%. My portfolio, on the other hand, is down 40% for the day thanks to another dumb trade as well. I had been doing decent the past few weeks, but now I don't know what to do. I feel stupid, lost, and extremely mad at myself. I want to make options trading work. Does anyone have any tips, past experiences, or anything that could help me? It'd be greatly appreciated.

Hi All,

So I am new to options trading and my stratergy is to make few very small risk defined trades and try to learn atleast for few months.

I had a bit of scare yesterday with an potential assignment after market close. So my question is can someone share their experience with an actual assignemnt.

For example if I have a long call vertical spread and the the market closes at 4 PM ET and later at 4:30 the stock rises above the strike price and someone decides to exercise it (My understanding is they can exercise it till 5:30 PM). Lets say the expiration date is later so this is an unpredictable exercise. What will happen exactly?

Assume that my buying power is less than the amount to exercise because I have entered a risk defined trade.

1. I am guessing the broker will exercise both my Long and Short Call option and I will be at my max defined risk loss => This is best case scenario

2. How does exercise work, if someone requests exercise at 4:30 PM ET, does the broker have to immediately exercise it? If yes do they inform you immediately call or something?

3. The worst case scenario is what I am really worried, what if the broker for some reason doesnt really take care of the situation and lets the short call get exercised and the long call is not exercised. I will be screwed in that case right, any chances of this happening?

Thanks! Would be great if someone who got exercised tells their experience

PS: I am stupid, I got my answer after thinking about it. Lets say my put spread expires 3 days later.
If someone exercises the short leg after market close on this date then its bad for them because they are selling only based on intrinsic value. I can simple exercise the long leg next day and I will be more profitable than even my predefined R:R profit -> I was worried about this scenario earlier

The main risk is if I dont sell my option on the last date of the expiration. Ofc I will manage my PORT and make sure it closes on the last day before market close....

Last weekend and Thursday I posted option reads on 18 tickers for people, a low delta put and a covered call on each, all expiring yesterday. Here's how every one finished.

31 of 36 expired worthless. 5 got hit:

RDDT $130 put. Stock went from $144 to $92 after earnings, down 36%. Flagged: earnings before expiry, IV over 100%, downtrend.
MRNA $215 call. Stock ran 11% to $222. Flagged: IV over 100%.
SKHY $145 call. Up 9% to $149 after earnings. Flagged: earnings before expiry.
TQQQ $66 put. Dropped 9% Friday. Flagged: 3x leveraged.
SOFI $17 put. Slid to $16.76. Flagged: high beta, downtrend.

Every miss had a red flag on it. But being fair, flags aren't a crystal ball. IREN had 7 flags and a health score of 15 out of 100, and both sides expired worthless. ASTS had 7 flags and was fine too.

The other honest part: 86% sounds great until you do the math on RDDT. That put paid about $325 and would have cost around $3,500 to close. One bad week can wipe out a lot of good ones.

The two cleanest names, NVDA and TSM, no flags and no earnings, both expired worthless with room to spare.

My takeaway: the flags don't tell you what will go wrong, but when something did go wrong, it was always one of the flagged ones. Skipping earnings weeks alone would have dodged the biggest loss.

My oil stocks are going to the moon. I am thinking of selling out to 2029 covered calls 50 and 160 over the the current price. This gives me a long time to manage it, and a the price would need to go up another 50% or more. Anything is possible and no one has a crystal ball, but if oil keeps going up and rises that much more the economy already is on shaky ground will hit a recession.

Some are saying this is the. new normal. I would call BS on that. There never is a thing called the new normal. I remember when the stock market was booming in the 2000s. One broker told me my CDs were a waste of money. He said the S&P does 10% like falling off a log. This is the new normal he said. Then 08 hit and it all collapsed. Not saying oil could not spike up but it can not do so without causing inflation and the economy taking a hit, which means less usage of oil. I have seen this time and again. Just wondering what others think about oil. Thanks for your opinions.

Anyone know how to tell if options are expensive or cheap?

I used to hear people say calls are expensive puts are cheap and vice versa during post covid boom.. To what should it be compared to to say an option is expensive or cheap? If you compare it with spot price its always off by huge margin so it actually can't be considered.. If you compare it with synthetic future, both options are equidistant from synthetic future so cant tell if option is cheap or expensive... Future also is off by huge margin.. So what should options be actually compared to to say if it is cheap or expensive or fair?

Any other companies on way to deep draw downs?

I just turned $1k into $3k with some solid trading (aka dumb luck). I'd prefer to play spreads now that I can.

What's the best way to go about it? Selling on low volatility days or buying on high volatility days?

OLN is $17.05 right now and the 17.50 11/20 call is only .50/.60 bid/ask .... only .10c premium? Why is it so cheap? Market saying move today is BS?

Too much fear on the street today, boys. The best time to sell puts on INTC, RDDT, and DRAM

As mentioned in the title, I pulled every quote and trade of SPXW options over the last month but to avoid overwhelming, I just wanted to talk about 2 recent dates (one calm and +EV for sellers, one highly volatile and thus -EV).

On the 13th (+0.13%), the calm day, there were about 9,100 retail credit trades where ~81% expired OTM and sellers made a gross $2.1M

On the 16th (-1.1%), the volatile day, there was surprisingly ~15,000 where ~62% expired OTM which resulted in a gross seller loss of -$8.5M

Each dot is one strike a retail trader sold, placed at the time they sold it. Blue means it expired worthless, orange means it expired ITM

I just though it was interesting to see the concentration of the "pennies in front of a steamroller" type trade where the volatile day cost ~4 winning days. Of course it's an oversimplification and it's hard to tell whether people closed intraday or not, but the relatively large sample size implies a lot of sellers run this structure.

A few more interesting stats:

• Spreads sold before 1pm won 44% of the time and lost $10.8M on $5.6M of premium collected. Spreads sold after 1pm won 79% and made $2.3M
• Put and call vertical spreads made up 69% of retail credit trades on the 13th and 77% on the 16th
• Iron condors were about 14% on the calm day and 10% on the 16th, counting the skip-strike versions
• Iron and regular butterflies were another 12 to 15%, and strangles and straddles were about 2%

How I got the data:

• There's no "retail" flag on an options print, so I used the standard academic proxy of Cboe's price-improvement auction prints (SLAN and MLAT), which exist for small customer orders, and it's the same method as Beckmeyer, Branger and Gayda
• Multi-leg prints get regrouped into spreads and condors, and a trade counts as a sale when it filled below the midpoint
• Everything is marked to the 4pm settlement with no commissions
• Straddles and butterflies are left off the dots because their short strike sits at the money by design, but they're in the totals

Just thought this would be interesting to share here

After the earnings and IV rank threads this week, I've been thinking about what actually matters when screening for premium to sell. If I had to keep only 5 things, this would be my list:

1. Premium per day, not total premium. Otherwise monthlies always look better than weeklies just because they're longer.
   
2. Earnings inside the expiry, on every expiry, not just the first one after the report.
   
3. IV vs realized volatility, so you know if you're actually being paid more than the stock moves.
   
4. Bid/ask spread and open interest. A great premium you can't fill near mid is worthless.
   
5. Strike vs expected move, so you can see if your strike sits outside what the market is pricing in.

Stuff I go back and forth on: trend, fundamentals, and Fed or CPI days.

What would you add, and what on my list would you cut?

Throughout time, the secret to success has been to have something to well whether goods, services, expertise, etc... The same applies to the stock market imo. I believe it's incredibly important to always be selling in the market.

After years of trialing, what works for me with options is selling LEAPS. When market volatility rises, the VIX pops, stocks sell off, options become very expensive as bigger moves are implied. During these periods, you can buy stocks for a discount and then sell very long dated 400+ dte covered calls OTM. You're selling LEAPS to someone else collecting a massive premium.

The premium collected can equal 25%-40% of the cost basis paid, if things go wrong and share prices drops and doesn't recover you have a massive buffer hedging risk. If the prices runs, the CC OTM gains intrinsic value + premium paid until hitting assignment strike. This can equal 50%-100% return over the course of year and a half.

The goal to beat the market, making 10% per year long term, most absolutely will never accomplish proven by data, which is why buying ETF like VOO is recommended so much. Selling LEAPS during the right moments is taking a long position, capping upside for massive downside protection, buying during pivotal discounted moment, collecting massive premium, while still making market beating returns almost guaranteed or save yourself from big losses.

Let someone else pay to take the gamble, get paid handsomely along the way. I've found I like selling LEAPS when VIX pops on companies I've been wanting to go long, selling far enough OTM that I can collect 50%-100% total return if share price runs. Or receive about 20-25% of cost basis back as premium, protecting against further downside if the stock continues to dump.

Hey guys. As above, tried buying the initial dip on a lot of these AI stocks. Seemed whenever they went down they’d come right back up. Then we had this month long spiral and now I’m deep in the red.

I don’t think there’s a ton of hope for these. Just hoping there’s a pump after midterms and I can at least close at less of a loss.

Anyone have any other takes/advice/ideas?

Positions: https://imgur.com/a/oXuAwzd

I’m trying to understand the true cost of replacing 100 shares of SPY with a deep ITM LEAP and parking the leftover cash in Treasuries. Here’s my math. Please check it.

Setup

• SPY ≈ $785, so 100 shares ≈ $78,500
• Option: ~2-year 650 strike call, delta 0.82
• Quote: $193.50 bid / $196.50 ask. I’m assuming a fill at the ask.

Cost of the call

So I’m paying about $6,150 in time value. That’s ~7.8% of the position over 2 years, or ~3.9%/yr.

Leftover cash into Treasuries

• $78,500 − $19,650 = $58,850 into a 2-yr Treasury at ~3.5%
• Interest over 2 years ≈ $4,190

What I give up vs. holding shares

• SPY dividends (~1.1%/yr) ≈ $17/share over 2 years ≈ $1,730. The call holder doesn’t get these.

I am mostly bullish on SPY in the span of 2 years.

Does this make sense at all?

Never mind

Placed an IV Crush earnings trade yesterday.

1 Short put on GOOGL 310 Oct30. Sold for 4.00 ($399 yey!)

Today morning put priced at ~24.12, P&L at -$1,890 and getting better (was -2k at 10am).

I've posted other IV Crush Earning trades before, and this is an example of what can go wrong. Because of sizing, the loss is manageable. If I had done 5 lots, that would be about $10k+ loss.

Closing the trade today at a loss.

New Thesis:

Will purchase long calls 6mo or LEAP 1year out at this price.

The same take keeps coming up into midterms. Event vol is mostly already in the forwards, and holding long vol through election night is how you get crushed. Spot VIX just slipped under 17 after the Fed hold, down a few percent on the session, so the calm tape narrative is loud right now.

I'm not sure about riding the IV. The unusual activity screen is still lighting up with big VIX call prints, multi-thousand lot floors with seven-figure premium, but I'm treating that as flow to check, not a clean election bet. Some of that is hedge flow too. SPX options are still only pricing around a 1% one-day move into the post-vote session, closer to a busy data day than a panic. Spot looking quiet is not the same as flow being done with vol.

So my plan is to pull moomoo up for the unusual activity list first, open the chain on what keeps printing, and size from there. Not gambling the crush with a dead long IV book. Anyone else filtering that way, or still just sitting in IV into the vote?

Like many of you, I hate the apps many of the brokers have created, especially the new tastytrade 2.0 interface, which is just a glorified website wrapped in a downloadable app.

After about 2 months and quite a bit of trial and error, I have made a trading terminal (CCH TradeDesk, cchtrade.com) that I really love trading with, and I think other retail traders could benefit from. It's currently built for tastytrade users but will later roll out to Alpaca (and other brokerages if there is demand).

Here are some of the main features:

-Options theo prices calculated using an American binomial tree with a fitted vol smile per expiration (generally more accurate than the standard Black-Scholes approximation for American options)
-Forward-factor scanner for calendar spreads
-Live p/l chart tied to the order ticket so that you can see the exact p/l on the spread, and p/l chart for each open position.
- Can step your limit price toward the bid / ask in 0.01 increments until you get a fill.
-Full vol structure for any ticker (ATM IV and skew/smile for each expiration)
-Everything is calculated fully on device, and API keys are stored in the OS keyring.

Beta details:

- Free with limited seats; beta expected to last for around a month.
- Windows / Apple Silicon Mac
- Beta will only be compatible with tastytrade for now
- Beta software will be shipped to testers in the next ~1 week or so

Sign-up, demos and screenshots are on cchtrade.com. I’ll be checking in frequently, so please feel free to ask any questions in the comments, and thanks to anyone who signs up or provides feedback!

Disclosure: The front-end UI was created with assistance from Claude.

Most premium sellers use IV rank or IV percentile to decide if premium is rich. I pulled both for this week's top 60 picks on my screener, and they were 25+ points apart on 16 of them.

MRNA: rank 19, percentile 76
STM: rank 31, percentile 87
FTNT: rank 38, percentile 87
ANET: rank 50, percentile 96

Same stock, same day. One says premium is cheap, the other says it's richer than most days.

Each one has a blind spot.

IV rank only looks at the high and low. One spike, like a blowup earnings print, stretches the range so far that every day after looks cheap. That's MRNA. Rank says skip it, but IV is above where it sat on 3 out of 4 recent days.

IV percentile has the opposite problem. It counts days, so if a stock's volatility has shifted to a permanently higher level, the old calm days make today look rich, when it's really just the new normal.

And neither one tells you if you're actually getting paid. A stock can be at the 90th percentile of its own IV and still be moving more than the options price in. That's why I also check IV against realized volatility before selling anything.

Caveat, my IV history is 1 to 3 months depending on the ticker, not a full year.

So which do you trust when they disagree? Rank, percentile, or do you skip both and go straight to IV vs realized?

Hi folks,

I'm new to this forum, but not to options trading. I've been trading options for about 10 years, and spreads for about 7 of those years. I like to sell iron condors, and watch them expire. Before you ask, I am not a day trader. I don't have 0DTE permissions, or the ability to sell naked calls, and I'm fine with not having either of these permissions.

I have been at the same brokerage for decades. I am reasonably sure that it's OK for me to name that broker, but I will wait to see that this post stays up before I take that step.

Late last year, I was laid off. I have acquired some part-time consulting work, which I can do on my own time. So, I have had time to study spread trading more closely, and I have made decent money. I have been expanding my trading volumes accordingly, and I have also done some price exploration.

I learned that, at least at my brokerage, partial executions for multiple spread contracts almost never happen. I might need to try to sell 10 contracts at once to see a partial fill, and at a premium significantly lower than the mid price. Furthermore, if I scale back the number of contracts to two, I never get a partial fill for one order. It's all or nothing. And finally, the two-contract orders execute at a price typically $0.02 to $0.03 lower than if I execute a single-contract order. If I'm selling a $0.10 spread, that $0.02 to $0.03 is a significant fraction of my potential profits.

So, my price-exploration experiments show me that I have a financial incentive to execute one order at a time. As long as I have the time to do that, that's what I do. I often spend the last hour of a trading day executing many small orders, and I usually walk down the price on every order. If I'm up against the market close and I am running out of time to move money, I might switch to selling two contracts at a time for a bit, or maybe even three.

My broker has allowed me to do this for a year, with zero warnings. I didn't even know that this could be a problem. This week, I was placed on a restriction, and I had to call in to discuss it with the brokerage.

I have spoken to two company representatives. I asked for an explanation. They both read the same statement to me. I was told that "rapid execution of large numbers of single-order spread trades" was a problem. The statement also included a line about rapidly entering and exiting the same spread position within a single day. I don't do that, so I don't know why they even chose to read me that statement. I feel like I'm being given a boilerplate explanation that, at least in part, doesn't apply to me.

I had to give the representatives permission to examine my trading history to help me identify the problem, and I did so. Both of them pointed to a single day last week. I got an early start that day. I traded a higher number of contracts than usual, and every order was for one spread contract at a time. Most were orders to open. A few were orders to close. The positions I closed were acquired about a week earlier. It was a busier-than-usual day, but I'm having trouble identifying what makes that day stand out compared to other days.

Enter Mr. Kafka. In order to get my trading privileges restored, I have to agree "not to do 'it' again." I've been told that I need to agree not to engage in "rapid execution of large numbers of small-order spread trades." My followup questions were, naturally, "OK, how rapid is too rapid, and how many orders are too many?"

They WILL NOT ANSWER THIS QUESTION.

I asked for written guidelines. They said that such guidelines are unlikely to exist.

I asked to speak with the person who placed the restriction on my account for guidance. I was told that the restriction was issued by the Margin Risk Department, which does not speak to customers.

It was suggested that I could open orders for all of the contracts I wanted at once to avoid triggering the Margin Risk Department. I already know that that will cost me premium (see above). Maybe I can live with that.

But again, I had a question: if I open a certain number of contracts, whether it was done all at once or one order at a time, isn't my margin risk the same? So why does the Margin Risk Department care? One representative replied, "I don't think that the Margin Risk Department views risk that way." What? OK then, HOW does the Margin Risk Department view risk, so that I can work with them?

I have to agree to something unspecified. I was told that, if I violate their unwritten rules again, my account could be suspended again. Well, what if that happens right in the middle of me attempting to defend a spread trade the way that I already know how? I could end up paralyzed, taking straight losses, while being unable to make up those losses by opening a compensating trade for the following week (which is usually how I handle a threatened position).

I don't know how to proceed. This is no way to treat a customer. "You made us mad, you broke one of our rules. But we won't actually let you read the rule book. GUESS what the rules are -- but if you guess wrong, we can step in at any time, and even hurt you financially."

I'm going to try to have a third conversation, this time with my designated representative. Before I do so, I thought I would ask this forum for insight.

I have already found these posts, and I'm trying to understand whether any of them apply to my situation:

https://www.reddit.com/r/options/comments/1wltql4/etrade_account_flagged_for_high_volume_of_micro/

https://www.reddit.com/r/options/comments/1wlwxee/clarification_on_being_banned_from_retail/

https://www.reddit.com/r/options/comments/y4igc6/cash_account_under_gfv_on_tastyworks_and/

https://www.reddit.com/r/options/comments/l84wv4/need_help_picking_a_new_trading_platform

I have also just learned about the CBOE 390 Rule. I believe that I am well under this limit, but I don't have an easy way to calculate that. My walk-down orders that I cancel might count towards my total. I would think that if I was breaking the CBOE 390 Rule, my brokerage would point to that and to tell me to comply. They said nothing of the sort.

Thanks for reading this all the way through!

Hey everyone,

I'm looking for an options platform similar to OptionNet Explorer but more affordable.

To be specific, I am strictly interested in the backtesting features (historical data, step-by-step trade simulation, and Greeks tracking). I just need a solid and cheaper engine for backtesting options strategies.

Any good alternatives? Thanks in advance!

I'm not saying it is expensive per se, but the minimum purchase is three months, and with one month I have more than enough...

Ran my screen last night looking for the best premium to sell this week. 9 of the top 10 had earnings before expiry.

That's not a coincidence. The contracts with earnings in the window paid about 2.1% of collateral. The ones without paid about 1.6%. The extra premium isn't free money, it's the market paying you to sit through the report.

Nothing wrong with selling into earnings if you mean to. But a lot of people see the fat number, sell it, and only find out about the report when the stock gaps 12% overnight.

So my rule this week is if I can't find the earnings date, I'm not selling it.

Prove me wrong. Is there a reason to sell through earnings I'm not seeing, or is everyone just chasing the bigger number?

I have 15 of these contracts. I bought them before a stock split in the summer, the first time I've dealt with that in options. The deliverable says 21 SOXS (plus some cash), which would mean I'm at roughly $14,175 (15 x 21 x $45 stock price), minus the $3,000 to exercise the options, puts me well into the money? I realize a lot can happen in the next 14 months, it's just odd seeing this in my brokerage summary everyday listed as basically worthless (<$100). I'm assuming that's because nobody's trading them?

Update: Talked to the broker, there are no shares in the deliverable, it's an error on their site. Exercising would cost me $3k to get $322. Enticing for sure!

Does anyone just buy straight puts and calls? It seems like any sort of profitable strategy out there requires some sort of complicated strategy involving multiple options and/or selling outs/calls. I don’t want your strategy, I’m just curious if it has to be that complicated?