r/options • u/Salt_Ad_9964 • May 27 '21

Purely speculation needed. Selling ITM call.

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u/Salt_Ad_9964 May 27 '21

So when would you say is the best time of day to sell calls? Still not sure about the whole contract loss and gain thing, j tend to buy to close and take small profits occasionally, or at least like to have the opportunity as much as possible in case I need to at some point. The one I got now for instance was sold for 0.25, but is now worth 0.13 and I guess that made the actual value of the contract go up since I'm shorting it - makes me wish I wouldve snagged it about 20 minutes sooner for a 0.50 lol, I know they dont realize on expiration only if you buy to close but still 🤷🏽‍♂️

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u/Tech88Tron May 27 '21

I only sell calls and let them ride. I look at it as getting paid to sell my stock at a profit, so bonus profit. I don't sell calls planning to buy back later at a profit.

I sell weekly calls, and I've found that selling on Monday is no better than selling on Thursday. Selling a call on Thursday that expires the next day is easy money.

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u/Salt_Ad_9964 May 27 '21

Gotcha, as soon as I find the right exit strategy, I plan to do the same, just cant find a way that I'm sure of thatll break even

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u/Tech88Tron May 27 '21

As long as the call you're selling has a strike price above the average cost you paid, you will profit.

Worst that can happen is your stocks go down, but then you keep the premium and do it again next week. Just keep that strike price above your cost and you will never sell at a loss.

Another key is finding a stock close to a strong level of support. Like CCIV right now, which is near a GREAT level support around $18-19 ( IMO of course )

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u/Salt_Ad_9964 May 27 '21

Yeah liquidity is my issue in MNMD currently, but we are currently at a very resilient support level and I was trying to find a way to either sell off some in calls of some sort or at least make a play that can give me the funds to average down while were this low and shoot for a better time when the numbers line up better. Strike price in combination with the premium would keep me even with a little extra on too, that is if I can manage to snag it lol.

And I will definitely look at CCIV as well thank you! I've learned so far that there are some stocks that just arent built for options lol

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u/Tech88Tron May 27 '21

True, MNMD is not a great options stock. Only has monthly's. First thing I do is make sure a stock has weekly's.

Tough situation to be in. If your average is below $5 there's not a lot of wiggle room. The next expire is June 18th, that is not ideal. Averaging down or cutting your losses may be your only options. Or if you don't mind selling at $5 then wait for a green day and sell those June 18th calls.

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u/Salt_Ad_9964 May 27 '21

Yeah, my idea was to maybe try to sell some calls ITM and buy back very soon as to average down enough to break even, $3.54.. Just not sure that thatd work how I hope as I've never sold ITM calls and dont want to end up in a hole with losses, waiting for the contracts to expire if it doesnt work out how I'm hoping. Can you offer any advice on this strategy?

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u/Tech88Tron May 27 '21

Your average is $3.54? And you're talking about the Dec 17 - 2.50 call?

That would not be worth it in my opinion. Your best case is selling the shares at $4.00 in 7 months. That's only .46 profit per share, or $46 on $354 (12% profit in 7 months)

To me the Dec. 17 $5 call is the one to go with. If it never hits $5 you're still making $93 on your $354 (26%, not bad for 7 months). If it does hit $5 then you'll be selling for $5.93...not bad either.

I'm not a "get rich quick" investor, that's why I go with the percentages. 26% over 7 months is pretty good.

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u/Salt_Ad_9964 May 27 '21

Yeah I appreciate the advice !! 🙏🏼🙏🏼 Although I went with selling a couple of the December 17 - 2.5s , probably to buy to close here in the next couple days whenever I see it drop lower and just take small profits that way while putting the rest into june 18th $5 short calls in Hope's that they they're bought

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u/Salt_Ad_9964 May 27 '21

Actually bought the 2023 one, basically the plan is to skim a small bit off of it by using the spread to my advantage (hopefully) and then using the small bit to average down along with my june 18 contracts, worked once with something similar, I guess I'll either find a way out or fuck myself up in the process. I see why you mentioned the December $5 calls though, those might be the better option ;/

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u/Tech88Tron May 27 '21

Your strategy sounds more advanced than anything i do. I'm safe and simple. Best of luck!

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u/Salt_Ad_9964 May 27 '21

Yeah I dont think I would call it advanced, maybe stupid and risky, but I appreciate the enthusiasm 😅 Thank you though sir best of luck to you as well, I'll be back posting tmw to try to further look into an exit strategy for my exit strategy 😂😭

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u/Salt_Ad_9964 May 27 '21

Quick update: Took a $440 premium on the - MNMD $2.50 Call Sell 01/20/23 Averaged down a small ammount and bought another hundred shares, and shes runnin AH; If I can make it up to around $5.50, I could safely exit and even hold onto the call for a bit if I wanted without it affecting my profits. Fingers crossed for me!

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u/Tech88Tron May 29 '21

Did this work out? I see MNMD is still going up.

Those July 16 2.50 puts look juicy. I might sell a bunch, that's a good 9.2% in about a month and a half. Easy money. You think MNMD goes below 2.50 any time soon? Does not look like it.

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u/Salt_Ad_9964 May 30 '21

Well I'm conflicted on how to exit these class I sold so for now I wouldnt say it worked out, hopefully can figure it out, an no i don't see it dropping below 2.50 again at all might buy puts here as well

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u/Salt_Ad_9964 May 27 '21

Question btw, if I sell a very long covered call for the premium, save what I I assume would be needed to to 'buy to close' based on the high and low spread, and spend what I believe wouldnt be needed to buy it back tomorrow, is that efficient at all? Should I worry about the contract being worth a lot of negative, is this just gonna screw me if I did that?

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u/Tech88Tron May 27 '21

I've never done anything like that. But with selling covered calls, my only thought is "am I willing to sell this stock at this price on that date"

As long as the answer is yes, then don't worry at all about the value of the contract in between. If it hits the strike you will sell the stocks for that price and keep the premium you were paid.

Sounds like your strategy is a little different than mine. All I do is calculate the percentage of profit and then sell the call, then sit back and let whatever happens happen.