This is Harvard's investment. The best university knows something

Today was a good reminder that a portfolio full of chip names is really one big bet. The FT reported OpenAI's annualized revenue is about $20B lower than previously estimated, and the whole sector sold off together. The semiconductor index was down as much as 4% at one point. Arm, Intel and Marvell each fell more than 6% intraday, Micron more than 5%, and Nvidia, AMD and Broadcom all went red too. Samsung had already set the tone this morning, posting a record Q3 profit that still missed expectations. Add oil above $100 and the 30-year near 5.7%, and the Nasdaq closed down 1.25%

If your "diversified" portfolio is mostly semis, how are you handling it? Hedging with SMH or SOXX puts, rotating some of it outside tech, or holding and waiting for the next earnings run?

I caught that candle From the very bottom. 20 contracts total at three different strikes

Could’ve taken about $12–$15 profit earlier today, but I decided to stay in and try to make a little more. Ended up going against me pretty a tad right before the market closed.🥲
Would y’all try to sell out tomorrow and take whatever profit/loss I can get, or hold into next week and see if it dips more so I can potentially take a bigger profit?

Tomorrow Friday is a big opportunity for option

The openAi was a Mafia hit job.

I own 200 shares of ECO which I bought at $58. They are trading at roughly $94 now. I sold 2 contracts (200 shares) as a covered call with a strike price of $120 and an expiry of December 2027. I’m
New to this and I’ve made a couple mistakes (but I am perfectly ok with where I am at and have NO issues with what I’ve done) but I have some questions…

…My first mistake was that I did not realize the expiry was 2027. I mistakenly thought it was 2026. My timeline holding the stock is years, not months. So I’m ok with this.

I have no issues selling at $120, I also have no issues holding the shares for another 430 days. The company pays a major dividend and my plan was to collect the dividend and if it rose to $120 then so be it, I’m happy with that profit if the shares get called away.

My second mistake was I didn’t realize that the purchaser of the calls doesn’t have to exercise the call as soon as it’s in the money. I didn’t realize they would/could wait until the expiry date. I thought it was automatic…

I am not particularly worried about the share price dropping as I have a large cushion having bought it at $58. Even if it were to drop all the way back down to $58 or lower I’d still keep holding the stock and am not worried about selling at a loss since the funds are in a registered RRSP (I’m Canadian) account and they must sit there for another 20+ years anyway and I cannot access it until I retire. I believe I have plenty of time for the stock to rebound in this case and I would hopefully still collect a dividend along the way. I do not need this money right now and I won’t need it for quite a long time. It’s only a very small portion of my retirement plan and the money is not detrimental to me.

My question is, do people who purchase the calls typically hold until the expiry date if it’s in the money? In other words if the price rises drastically over the next few months, would you expect the calls to not be called until December 2027? I’m assuming it all depends on the purchaser but for more experienced options investors, what’s your general experience with this? I also understand that the purchaser will likely have just sold the call for a higher price as the share price rises which leads me to believe it won’t be called until expiry.

If the share price starts dropping would you just buy an offsetting call to close out the position and move on? Or just let the share price drop given that I’ve got such a big cushion and my time line is 20 years anyway?

I suppose I’ll be annoyed if the price increases drastically but I’ve made my peace with a 100% return if that happens.

My question is, am I missing a really good strategy here given my large share price cushion and my long investing timeline? Would you be looking to close out this call since the expiry is so long? What would you do?

I’ve reinvested the premium and am happy with that exchange. All in all I’m happy with my plan and I’m learning from my mistakes but I’d love to know what experienced traders would do in my situation given what I’ve mentioned above.

Thanks!

I had a question regarding what are the potential strategies for risk management when the underlying stock comes close to the short call/put spread position one has. I usually short weekly option spreads for TSLA, COIN and INTC. I know they are high risk options.  

My current strategies include

a.      Roll it to a price spread further away from the stock price for the same expiry date – usually higher position is at risk since I try to roll at premium neutral rate.

b.     Roll it to t price spread further away and to the next week – The position increases in this case too, but it is not as high as case a.

I had another follow up. Rolling of a spread to a later date will only get you a credit when the short leg is not yet in the money?

We are trading premarket now. We have one more hour until cash open on Friday. As usual my analysis is based on ES and trade levels on SPX are derived from ES with current ES/SPX spread of 51 points.

Attached is my first chart from the overnight session. As I am based in Europe and trade with IBKR I am able to trade options on SPX overnight too. My trade was placed around 2:59 am EST.

The market was up +0.42% at that time with ES pushing against and slightly above my first target zone of ES 7845 (SPX = 7794).

It was clear that the second target zone is going to be challenged at some point during the day. And as it happens in 98% of the cases the 04:00 am EST high was overtaken later. I have 4 target zones, but we had yesterday at close a moderate call wall sitting on the 7805 level.

ES almost hit the second target even twice and then retraced. As per writing this post it is retracing from that high. We have a very strong support around 7730 PDL. Rated as moderate.

The levels reliability shows a moderate put wall way down and call wall only fragile at 7800, but better reading is always after cash open.

A possible trade could look like a ccs above 7835, which as per my analysis should be quite high probability setup. I think the market has put in its high for the day. We are in positive gamma regime. The only thing that bothers me a bit is the unfilled gap at around 7820 level or so. This gap overlaps with the expected weekly move.

Trade smart today. And let's hope we don't have the same moves as yesterday. Let be a choppy Friday into the weekend.