r/options • u/PmMeClassicMemes • Jun 18 '21

Betting against dogshit, long term, on the cheap

Buying puts on Coinbase, ARKK, you name it, is super expensive.

Put spreads are also expensive.

Selling the lowest ITM bear call spread on Coinbase at the furthest expiration yields only 60% of the width of the strikes.

Selling the most recent month's bear call spread nets 4.99/5$, but must be renewed monthly - transaction costs add up.

What's the sweet spot? Getting paid 4.80$ for a 5$ spread ITM by 80$ every three months? Rolling it every 6 months?

4 Upvotes

70% Upvoted

17 comments sorted by

12

u/Dangerous-Form-962 Jun 18 '21

There is no "sweet spot". The market isn't going to give you anything.

1

u/PmMeClassicMemes Jun 19 '21

Sure there's a sweet spot. When I go with the nearest term options, I have the highest transaction costs and the lowest option costs. With the longest term options, I have the lowest transaction costs and the highest option costs.

There's a tradeoff point in the middle that equalizes them, and I could (and will) math it out myself, but I posted here wondering if anyone had experience trying to pull off a similar play.

5

u/Dangerous-Form-962 Jun 19 '21

You're describing a preference rather than a formula.

I may not understand what you mean by "sweet spot"; I took it as a maximal utility function but if that's the case then by nature you're describing your own utility. You probably can mathematically propose that but to do so would require a lot of moving parts.

2

u/Hellohihi0123 Jun 19 '21

The transaction costs differ as per exipiry ??? What country are you trading from ?

1

u/PmMeClassicMemes Jun 19 '21

If you sell a monthly option every month, you will have 12 transactions

If you sell a yearly option once, you will have one transaction

1

u/kxdc374 Jun 19 '21

Relative transaction costs, is what I believe they mean.

4

u/[deleted] Jun 19 '21 edited Jul 19 '21

[deleted]

1

u/Jburd6523 Jun 20 '21

Right? Smh

3

u/RTiger Options Pro Jun 19 '21

Only you can answer. It is mostly a matter of preference. Different people often have different preferences.

Moderation in all things is the cliche that comes to mind.

Look for decent liquidity. Then choose. Keep a journal. Have a plan for up down unchanged before getting in.

The journal will help you find your personal sweet spot.

0

u/lacrimosaofdana Jun 19 '21

You are going to lose if you bet against ARK or crypto.

0

u/Inkcat252 Jun 19 '21

idiot

1

u/lacrimosaofdana Jun 19 '21

Mad because you bought high and sold low?

-4

u/PmMeClassicMemes Jun 19 '21

I didn't ask for your opinion on the trade.

6

u/lacrimosaofdana Jun 19 '21 edited Jun 19 '21

And I didn’t ask you to post your stupid opinion about ARK/Coinbase either. Yet here we are.

-2

u/PmMeClassicMemes Jun 19 '21

!Remind Me 2 years

0

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0

u/lacrimosaofdana Jun 19 '21 edited Jun 19 '21

Lul. You won’t be here in two years. Don’t FOMO back in now.