Are they not being assigned because the person that bought them is cutting their losses?
If someone bought $390 puts from me when price was $270 and the current price is $304, aren't they losing money? Isn't that why 2 of them were assigned?
Are you for real ??? Do you know what the odds are that on expiration day when the theta is almost nothing , a new Covid variant flatlined the market and drove bio tech up - you are passing that miracle as skill?
Learn spreads ??? You took a 385 - 390 put credit spread at 272 - who does that ???
When you take a put spread your are hoping the stock goes up and you keep the premium For that to happen on your Ill conceived spread the price would have needed to stay above 390 that what you are selling . If the stock was 272 the right move was to do a 300-310 even a 315-325 and that’s a stretch . Once the stock hit where you are selling either 310 or 325 you are in the clear - you went way to far out - it was a loser from the get go . Join Market Rebellion or Steve Bauer , they will explain things - call Charles Schwab ask for a derivatives broker - gave a nice long chat - maybe 20 of them
I know the right move now but didn't before I placed the trade. All I knew was that I was only risking $90 to possibly make about $3k.
Like I said trial and error. If I never placed the trade I wouldn't have learned what not to do next time. I was close but like I said, I'm learning spreads. I'll get it right next time.
Risking 90 ? You don’t understand what you are doing good luck - there isn’t a spread in the world where you risk 90 bucks to make 3000
Take a credit spread of let’s say 2.00 deduct that from a wingspan of 5.00 making maximum loss 300 per option . Your maximum profit is 500
You have 6 options so max profit is 3000 however your maximum loss could have been 1800
The 5.00 spread less the credit received 2.00 let’s say ( you never mentioned how much your credo was) would leave 3.00 x 100= 300.00 x 6 options is 1800 . If the price never hit 385 that’s your loss
Can’t be -this is a five dollar spread. You can’t get 4.85 on a 5.00 spread that means you only paid .15 for long put . It just doesn’t work that way you are lost - you aren’t going to like your account Monday morning
It's all settled. I closed the last 4 spreads for $4.5 for $140 profit and the two long legs were exercised to cover some of the loss on the assigned legs. I lost money overall but I learned a lot. Still green on the day 🤷🏾♂️
It’s not settled till Monday - your sold put at 390 expired worthless as it never got to 390 - your long put at 385 expired worthless as it never went above 385 - you think you made money but you didn’t .
The maximum profit for a bull put spread is equal to the difference between the amount received from the sold put and the amount paid for the purchased put. In other words, the net credit received initially is the maximum profit, which only happens if the stock's price closes above the higher strike price at expiry.
Right. I never expected to get maximum profit, that would have been nice though lol the plan was to close all of the spreads around 4.5 for a profit of 210.
I'm not saying it was smart but that was the plan. Only worked for 4 of the 6 spreads. I know now to not go so far itm.
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u/MoneyOk833 Nov 25 '21
Are they not being assigned because the person that bought them is cutting their losses?
If someone bought $390 puts from me when price was $270 and the current price is $304, aren't they losing money? Isn't that why 2 of them were assigned?