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The most popular Products mentioned in /r/options:
The most popular Services mentioned in /r/options:
Robinhood
Schwab
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Seeking Alpha
MarketWatch
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The most popular Android Apps mentioned in /r/options:
💰 📈 JStock - Stock Market & U.S. Investing
Robinhood - Free Stock Trading
TradeStation Mobile
tastyworks
The most popular reviews in /r/options:
Actually agree with OP on this, the book is very good at explaining why/when positions would be used. I got a copy a long time ago from Amazon.
https://www.amazon.ca/Options-Playbook-Featuring-strategies-all-stars-ebook/dp/B00J8KC8NA
The equation you posted is the full Black-Scholes PDE and the equation you're talking about is presumably a solution to the above PDE. Asking what each of the terms is probably isn't the right question, if that's the kind of info you want you should take a step back and look up a full derivation. There's a pretty common text out there by Marek Capinski (The Black-Scholes Model) that walks through the derivation but unless you have a math background it will be beyond you -- but if you don't have a math background, looking at the full PDE also will be beyond you so.... yeah. You can probably find derivations online as well for free, but I don't have a link to one and can't recommend any.
Just as far as terms, S is probably the price of the stock, sigma is usually the volatility, r would be the risk free rate, t would be time, and V is probably the price of the option.
Right side and left side isn't the right way to look at an equation like this, you need to look at all the terms because you're looking for a solution that satisfies all of it, not two halves that you're trying to match up. If you look at different derivations, they'll likely have the terms organized differently. Probably lots of them isolating V or maybe everything set equal to zero.
Yes. Things can move quickly enough that you can't rebalance.
But more importantly - premium sellers typically don't delta hedge. The point is to pick up nickels ahead of a steamroller. No real way to hedge that risk. And once the account goes unsecured, the broker is on the hook for the excess.
In his recent bio, Chuck Schwab wrote about an incident that occurred back in 1987 when the market crashed 22% on Black Monday. Unknown to Schwab was that one client in Hong Kong had been selling downside puts so that his account was unsecured in the amount of $100MM or so. That was enough to put the firm's future in some doubt. Fortunately, the client had other assets and most of the loss was recovered. But the risk from premium selling is very real.
Stop taking super risky 0 DTE intra-day positions then and RH won't fuck with your position. They explicitly say they'll close your long positions automatically if they're at risk of expiring ITM and you don't have the cash to cover exercise. They'll also close anything at risk for assignment which you can't cover.
Read it all here: https://robinhood.com/us/en/support/articles/expiration-exercise-and-assignment/
https://www.amazon.com/Rookies-Guide-Options-Beginners-Handbook/dp/193435404X
This goes over all of the basic trades. How to enter and exit. And how to make adjustments. It’s a little long winded but very informative.
https://www.amazon.com/Understanding-Options-2E-Michael-Sincere/dp/0071817840
This is less wordy and covers the same topics. However it is less informative than the rookie book. Probably good to start here and then read the rookie book.
Just watch, read, and learn from TastyTrade. After a year or so of watching them and actively trying to learn, you'll be able to develop your own style of trading that fits you. They have more than enough content to teach you the basic, intermediate, and advanced strategies that you need to know, all in an easy to digest format. Start with their beginner series, and if they mention something you don't know just google the term and it will be on investopedia or somewhere similar.
Books on options are only good for the more advanced math heavy strategies and understanding. I wouldn't advise starting with them.
If you want to read some good books on trading in general while you learn, then go with:
- Reminiscences of a stock operator (by Edwin Lefèvre)
- Market Wizards (by Jack Schwager)
- Dark Pools (by Scott Patterson)
Also start listening to the Chat With Traders podcast. It's amazing and has been one of the gateways into so much content, questions, and knowledge that I would never have known about otherwise. I've also contacted some of the guests and was pleasantly surprised to get a quick response back and still talk to a couple of them.
Do yourself a favor and DO NOT read Intelligent Investor or One Up on Wall Street. They're so old and outdated and were honestly a huge waste of my time.
Wait? You worked hard to make a lot of money and now want to intentionally lose or put at risk some just to pay less taxes?!?
Be sure to look at something called a Wash Sale as this is designed to prevent what you are suggesting. https://www.schwab.com/resource-center/insights/content/a-primer-on-wash-sales
Do the right thing and pay the taxes like the rest of us! Then celebrate you had a great year of profits to do so and go do it again next year to pay more taxes! There are many around here who have had losses and would happily change places with you!
So you are correct...the closer to ITM...the closer the D is to 1 or -1 (in puts)....Theta or “Time Decay” is greatest at or near ITM...but as you go further out of the money or deeper ITM...theta will tapper off....Vega or your “Accelerator” for how Delta moves....the closer to a Delta of 1 or -1 the Vega will be highest...as you come closer to expiration Vega will lessen. It seems to also move less the further you are away from Delta. I like how Swab explains the Greeks:: https://www.schwab.com/options/understand-options
Here's the email:
>Early Access to Multi-Leg Options Strategies
>
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>
>Hi,
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>We're excited to announce that multi-leg options strategies are coming to Robinhood!
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>This means you can now trade multi-leg options strategies in a single order and monitor these contracts together, for free. To get started, you'll need to download the latest version of Robinhood from the App Store or Google Play.
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>Please don't hesitate to submit a request with any questions or feedback. We're here to help!
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>Sincerely,
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>The Robinhood Team
>
>robinhood.com
A deeply out of the money SPX put has a very low chance of expiring in the money. Therefore you can only sell it at a very low price, say $0.05. If SPX crashes 10% instantaneously, then the chance of it expiring in the money has increased dramatically. And therefore the put will be much more expensive to buy back. It can be so expensive to buy back that you may not have enough cash left in your account to do so. In that case, your broker would have to step in and cover what you can't.
If you read Chuck Schwab's autobiography, Chap 19 describes an event like this that nearly ended his company back in 1987. An investor in Hong Kong had sold a bunch of deeply OTM SPX puts just before the market crashed. Schwab ended up on the hook for about $100M in losses.
>Is there anything I can do?
Nope. This is standard:
Unlike a stock, each options contract has a set expiration date. ... We'll automatically exercise any option in the money if your account has the required buying power. If you don't have enough buying power to exercise your option, we'll attempt to sell the contract in the market for you about 1 hour before it expires.
Expiration, Exercise, and Assignment | Robinhood
https://www.amazon.com/dp/0071817840/ref=cm_sw_r_cp_apa_i_ErJCFbMNTFVZF
Don't trade options until you fully understand everything about what you are trading. (You don't have to understand the whole market or get crazy, but at the very least understand exactly what you are selling/buying/borrowing/obliging to do.)
Also, you should never use absolutes like "fact" when talking about stocks and the future.
https://robinhood.com/support/articles/360001214723/expiration-exercise-and-assignment/
This has been clear on their page for at least a month now (and probably much longer before that), I was looking into doing PMCC’s and checked the exercise rules before getting into it. The long call is only exercised if you do not have the cash for shares
They even tell you ahead of time that they will do this, but no one ever pays attention or bothers to read the fine print:
https://robinhood.com/us/en/support/articles/expiration-exercise-and-assignment/
As the expiration date of your option contract nears, there are a few important things to keep in mind:
We’ll typically attempt to exercise any option in the money if your account has the required buying power. Please note that exercising or selling your options contract is ultimately your responsibility. We don't guarantee that we'll do so.
If you don’t have enough buying power to exercise your option, we’ll typically attempt to sell the contract in the market for you about 1 hour before it expires.
Robinhood takes into consideration the value of a position, the implied risk and the customer’s current balance to make a decision on whether the position can continue to be held or not. In some cases, Robinhood believes the risk of holding the position is too large, and will close positions on behalf of the customer.
...
If you have a long put about to expire:
If the contract is in the money or at risk of being in the money, we’ll assess your account to see if you have enough shares to sell.
If you don’t have enough shares, we’ll typically attempt to sell the option. If you have 10 contracts and 500 shares, we’ll typically attempt to sell 5 contracts and allow the remaining 5 contracts to be exercised for a total of 500 shares.
Yeah, so, EXACTLY what I said, lol.
It’s alright, here’s what I recommend you do:
get a second broadband provider. Whatever the cost, it’s cheaper per month than losing $2800 due to connectivity issues.
You’re now going to have two modem-type devices, one from each provider
You’re going to get a LOAD-BALANCING and/or FAILOVER, ‘DUAL-WAN’ device.
This is going to allow you to have redundant internet connectivity; if Provider1 goes down, you will have automatic, no-intervention-required failover to Provider2, or vice-versa. In MOST applications you will see an increase in speed as well, as you will ‘bond’ these two channels together, such that, more-or-less, the speed of the two providers combined is ADDITIVE.
If you like your current router setup, or price is a consideration, and/or you want to keep your networking hardware in the basement, and/or only have one cat5 cable drop from your basement to your wifi ap/router, I’d get something like this:
TP-Link Multi-WAN Wired VPN Router | Up to 4 Gigabit WAN Ports | SPI Firewall SMB Router | Omada SDN Integrated | Load Balance | Lightening Protection | Limited Lifetime Protection (TL-R605) https://www.amazon.com/dp/B08QTXNWZ1/ref=cm_sw_r_cp_api_glt_fabc_YFWYFMY77RD5BVTAE9MK?_encoding=UTF8&psc=1
If money’s not a problem, I’d go with with a single device solution (dual-wan router and wifi router in one) such as this: TRENDnet AC3000 Tri-Band Wireless Gigabit Dual-WAN VPN SMB Router, MU-MIMO, Wave 2,Internet Router, Whole Office-Home Wifi, Pr-Encrypted Wireless, QoS,Inter-VLAN Routing, Black, TEW-829DRU https://www.amazon.com/dp/B07D5W2FGQ/ref=cm_sw_r_cp_api_glt_fabc_6RGT6KJJPKG6C7WQ288T?psc=1
You get this up and running, and you’ll probably never notice an internet outage again.
Happy to answer questions.
People should just bite the bullet and sit down to read a textbook. I recommend this one:
You can even find a pdf if you don't want to buy it. Why spend time reading or watching a video from someone who has basically no idea about what they're talking about? It makes a lot more sense to learn from a MIT academic that used to be a quant for a living.
I've always wanted to read dynamic hedging, but it has always been so expensive to buy. Currently $78 on amazon. I recommend The Next Perfect Trade by Alex Guerevich.
http://www.marketwatch.com/optionscenter/screener?screen=23&displaynum=100 http://www.marketwatch.com/optionscenter/screener?screen=2&displaynum=100
The problem with tape reading is:
you can't tell if someone bought or sold the option (unless it was executed at the bid or ask)
you can't tell if the trader owns the stock or is short (buying a huge amount of puts could actually be bullish if it's just a hedge and they're long)
you can't tell if it's opening or closing a position (a large buying of puts could be someone closing previously shorted puts)
If using a cash account (e.g. TD Ameritrade cash account), PDT does not apply, as mentioned by the other poster. PDT only applies to margin accounts. This is a FINRA rule.
If a broker allows you to use unsettled cash, you can be at risk for settlement violations. See good faith, freeriding, and liquidation violations: https://www.schwab.com/resource-center/insights/content/stock-settlement-why-you-need-to-understand-t2-timeline
tbh I find IBKR desktop reasonable, it's their mobile app that I really can't stand..
That's why I'm looking for mobile apps with both good execution and UI, just when I have no opportunity to trade on desktop.. currently testing trystrikes.com app, if execution quality stays ok might consider using it long-term.. also plan to test tradingview.com, few reddit folks recommended it..
Looks good to me if you're bullish. Good risk/reward based on the Quantcha analysis: https://www.screencast.com/t/psCzFwzTctC.
I'd probably go with the 11/17 spread: https://quantcha.com/OSE/AMD/20-10-2017/13.52-22.48/BullPutSpread,P11,P17.
Option Volatility and Pricing - Sheldon Natenberg
Can be a little heavy but for anything you can find on YouTube acts as a good fill in the gaps.
I am learning how to do earnings too. I'm curious:
How do you decide strikes? When do you buy? How far away is expiry? How long do you hold before you exit? Stop losses? Do you focus on certain sectors?
I am using the data in this book by Shon and Zhou https://www.amazon.sg/Option-Strategies-Earnings-Announcements-Comprehensive/dp/0132947390
Here's a pretty good Schwab article on diagonal spreads.
LEAPS Diagonal Spread: What You Should Know
https://www.schwab.com/resource-center/insights/content/leaps-diagonal-spread-what-you-should-know
Absolutely can do this with LEAPs. Any option contract can be sold against. And LEAPS have a ton of time value cost so selling against is a solid strategy to whittle that away. Won't show up in your CB, so you have to track separately. I really like LEAPS but hate that extrinsic value cost.
https://www.schwab.com/resource-center/insights/content/leaps-diagonal-spread-what-you-should-know
The following article explains what to do when your CC is ITM, ATM, or OTM. Please go through and remember the matrix at the end of the article.
https://www.schwab.com/resource-center/insights/content/strategies-for-managing-covered-calls
A covered call can be challenging if the underlying stock bounces up and down a lot. The covered call trade tends to do less well with with a volatile stock, or market.
It works well with an underlying stock (and market) that is fairly predictably steady, perhaps with a steady upward trend. Last year, with the steady rise in market, and most stocks, many people doing covered calls did very well.
If the stock goes down rapidly, you have the same issues as owning just the stock, with "sell-or-keep" being the question, and it is then difficult to sell a call for income at worthwhile strike price, that is above your net cost on the stock (cost of stock, reduced by accumulated gains from the previous covered call transactions).
Here is a survey of Covered Calls at Schwab Brokers. They, and many other brokers have fairly wide-ranging materials. Managing Covered Calls By Randy Frederick (Schwab)
OptionAlpha, and other providers linked at right in this forum's sidebar have comprehensive option educational materials and videos worth exploring.
ATM options have the most premium (except in rare circumstances). See DUST example from today for 19 May expiry - https://www.screencast.com/t/0LLuSMPdHL. Since you are selling premium, go for somewhat close to the ATM strikes. Even if your position is recalled, you get to keep the premium you sold.
Plug in what the IV was right after previous earnings or average IV during non-earnings season to Black Scholes then you can graph theta decay.
https://www.docdroid.net/file/download/xG7tQC9/blackscholes2.xls
Freeman Publications have some great starter books.
Short, cheap, and to the point.
I would start with Covered Calls.
https://www.amazon.com/dp/B091DP1TNB/ref=cm_sw_r_cp_apa_glt_fabc_R70AZ3CFGA9F97GMJ5KB
That's awesome. Do you feel like you've gotten the hang of it?
I decided in September I wanted to finally pursue figuring out investing, and took A Random Walk Down Wall Street on vacation. Options were mentioned and I had no clue how they really worked. Stumbled on tastytrade and devoured into the last three months of the year. Funded a tw account when they opened and away we go. So I've been trading for about...three weeks. Ha.
To answer your edited comment, from 10 seconds of googling, Robinhood uses First in, first out to select the lot: https://robinhood.com/us/en/support/articles/cost-basis/
And here is a (paywalled) article from the WSJ that says they do not give you the ability to select which lots you want: https://www.wsj.com/articles/new-investors-discover-tax-pitfalls-of-robinhood-and-other-trading-apps-11618565406
To me, that would be a deal killer and I would immediately drop Robinhood. I use ETrade and you can pick your lot both on the order page when you close the position AND from the gains and losses page (as long as you do so before it settles). (So if you get assigned, you can choose which shares of stock sell.)
It sounds like, in this case, Robinhood's method is what you want - if you close one contract of the option on January 1, 2021 or later, then Robinhood is going to pick the older one for you.
Of course, this isn't always what you want. Suppose it was towards the end of 2020 and you had lost money on the second position and you wanted to go ahead and dump it so that you could take the deduction on your taxes. Robinhood wouldn't let you do that. That, to me, is an absolute deal killer.
Yes, this is why spreads exist. Anybody who thinks performing trades with unlimited risk is a good idea needs to talk to this guy.
If you have a contract that's about to expire, then Robinhood will attempt to exercise the contract or sell it 1 hour before close:
>##Expiration >###What Happens >As the expiration date of your option contract nears, there are a few important things to keep in mind:
>* We’ll typically attempt to exercise any option in the money if your account has the required buying power. Please note that exercising or selling your options contract is ultimately your responsibility. We don't guarantee that we'll do so. * If you don’t have enough buying power to exercise your option, we’ll typically attempt to sell the contract in the market for you about 1 hour before it expires. * Robinhood takes into consideration the value of a position, the implied risk and the customer’s current balance to make a decision on whether the position can continue to be held or not. In some cases, Robinhood believes the risk of holding the position is too large, and will close positions on behalf of the customer.
Per the calendar spread section of their advanced strategies page, you have until the next day to exercise the long or purchase the shares to close the short position. I would assume that also means that you can sell to close your long position and use those funds along with the proceeds from the sale of the stock to purchase those shares. Exercising would forfeit any remaining extrinsic value of your long call and should be your last choice.
https://robinhood.com/us/en/support/articles/advanced-options-strategies/
https://robinhood.com/support/articles/360001214723/expiration-exercise-and-assignment/
This has been clear on their page for at least a month now (and probably much longer before that), I was looking into doing PMCC’s and checked the exercise rules before getting into it. The long call is only exercised if you do not have the cash for shares
Options IV and Volatility for Margin are different things. The requirements I'm seeing for the stock right now are Medium with 60% initial requirement & 50% maintenance requirement.
The margin volatility being different from the IV of the options is where you would get the extra margin for the CC sale from.
"Robinhood determines a stock’s maintenance requirement based on a model that considers certain factors, such as volatility and market liquidity. Stocks that are known to be more volatile, for example, typically have higher maintenance requirements to ensure you have enough Portfolio Value to cover the position if it quickly decreases in value. Please note that Robinhood has full discretion to adjust margin maintenance requirements at any time."
https://robinhood.com/us/en/support/articles/margin-maintenance/
Schwab resource on option taxation:
“Bottom line The taxation of options can be even more complex than what was described above. That’s why we recommend that anyone who trades options consider working with a tax professional who has experience in options taxation so that you don’t end up paying more in taxes than is necessary.”
https://www.schwab.com/resource-center/insights/content/how-are-options-taxed
Have a read of this: https://www.schwab.com/resource-center/insights/content/reducing-risk-with-credit-spread-options-strategy-0
Max loss is the width of the spread minus the initial credit you received. In your case, would be $500 max loss minus $210 credit received.
There is data backing you up on that
Options flows are one of the most important things to watch for retail option traders.
Would recommend Tdameritrade as a better broker? Looks like there is a way to transfer stocks out of RH - https://robinhood.com/us/en/support/articles/transfer-stocks-out-of-your-robinhood-account/
​
#CancelRobinHood
It appears the wide spread is responsive to great uncertainty in the future of the company, and stock merger / tender offers.
Example:
Why NXP Semiconductors NV Stock Is Soaring Today:
Insiders say that Chinese regulators are accelerating their review of Qualcomm's buyout offer.
Anders Bylund - May 14, 2018 - Motley Fool
https://www.fool.com/investing/2018/05/14/why-nxp-semiconductors-nv-stock-is-soaring-today.aspx
$USO goes long on futures contracts on oil and rolls them to farther out date on a daily basis. Since the futures mkt is in contango, you're selling low and buying high.
Just look at a life cycle of futures contracts bought on specific date. Let's suppose that 1mo out contract was bought for $3 premium over spot. If the spot stays exactly the same, then that contract is now worth $3 less (immediately before expiration). This is just one illustration.
Read this for further info. Article is a bit old, so the numbers are off, but the concept is still the same. http://seekingalpha.com/article/3137316-oil-is-on-the-rise-but-do-not-buy-the-united-states-oil-etf
Schwab does an excellent job in this article explaining options and taxes. As usual...it isn't as direct and simple as it first appears.
How Are Options Taxed?
https://www.schwab.com/resource-center/insights/content/how-are-options-taxed
These articles are all over the place.
Random one: Schwab
https://www.schwab.com/resource-center/insights/content/a-primer-on-wash-sales
Basically, people once upon a time would sell their stock with a loss, to obtain a tax loss, and rebuy the stock at the new year.
Congress drafted a law to limit this tax loss harvesting.:
If you have a loss, and sell, and rebuy the same security within 30 days, the loss is not recognized, but the loss is added onto the follow-on security's basis, and the loss will be recognized when the follow on security position is closed out.
It matters at year end.
Example:
Sell stock for 80, that was bought at 100. Loss of 20.
Buy in five days same security, for 85. The basis of the 85 set of stock increased by the loss: 105.
When the follow on stock is sold, the loss is recognized via the higher basis in the security.
Dangers:
You sell some big item, for a big loss, but re-buy it. (But were expecting to take a deduction loss to reduce other gains).
If still holding the re-bought security at year end, the loss is not taxed yet, but waits for the sale of the follow-on security.
If you sell at a loss December 15, 2020 and rebuy Jan 10, 2021, the loss will not be able to be recognized in the 2020 tax return.
I know some people who create a 'blog' using a WordPress site. Then they type up notes for each trading day and add charts, articles, etc. to their post. They keep it private (you can make it public if you wish) and you can do this for free (if you host the website on wordpress.com).
You need to make sure that your account stays above its maintenance margin at all times, otherwise you'll get margin called.
Check more details here: https://robinhood.com/us/en/support/articles/margin-maintenance/
In ToS, if right click on your position, they will help you a.) analyze or b.) create a rolling order. It's essentially locking in your 30% profit and buying a high strike price either in the same expiration or earlier/later if you like.
This article should help - https://www.schwab.com/active-trader/insights/content/know-when-roll-em-how-roll-options-positions
No, but it is possible to SELL the call option. What most people do is "buy to open" a call option, wait for it to go up in price, then "sell to close" to get rid of it at a profit.
To understand why calls go up or down, you'll need to study the 4 main greeks. For example: https://www.schwab.com/resource-center/insights/content/how-to-understand-options-greeks
I think this article helped me though it might not 100% explain the math: https://www.schwab.com/resource-center/insights/content/how-to-understand-options-greeks
The very short answer is that if you use thinkorswim (or whatever platform) to display delta, you'll notice your option price has, for example, 0.45 delta. This means if the underlying stock goes up $1 in price, the price of one contract will go up (100 * $0.45) which is $45.
BUT HOLD ON! At that point, delta will change (see the article above for more details). Maybe delta becomes 0.50. This means if the underlying price went up $2, your contract price might go up ($45 + $50) which is $90.
I think there are even more complications though, e.g. implied volatility is low near the expiration of the option which might affect things further, but I'm not enough of an expert to fully understand that.
Lastly, when you sell to close the option, bear in mind that there is the bid vs. ask "spread" of the option. You need to watch this in thinkorswim or whatever. Imagine a very popular option lots of people buy and sell. Maybe the "ask" price is 0.45, so sellers want $45 for it. Maybe the "bid" price is 0.44, so people trying to buy it are willing to pay $44. That's a small spread, so you can buy and sell the option without much worry.
However if you don't pay attention and you buy an option for $120 with an ask of 1.20 and a bid of 0.50, you might be screwed! Imagine the stock price stays exactly the same...you just lost $70 on a contract if you can't find some other sucker to pay the same expensive price to take it off your hands!
I think Schwab will take a do-not-exercise. This page seems to indicate that.
Can you please explain more about how the auto-exercise of an ITM option cost you money? What is "fd"?
If you have a couple minutes, check out this Option Alpha Daily Call #278 podcast. https://player.fm/series/the-daily-call-from-option-alpha-options-trading-stock-options-stock-trading-trading-online/ep-278-best-place-to-open-an-online-trading-account It compares Robinhood to TDA and a couple other platforms. I'm with TDA using TOS - it's rock solid on Mac, Windows and mobile iOS, and crazy loaded with functionality. I'm down to a $1 a trade with them so the pricing is good too.
Fun fact. Before, I believe, 2001ish, the VIX used to be calculated in a different way. Some researchers from Goldman Sachs who were exploring how to price variance swaps (sort of like interest rate swaps, but with variance as the underlying). In the processe, they discovered a way of constructing portfolio of options whose total value is only dependent on market volaltility. The way you construct that portfolio is by weighting each option by the inverse square of its strike. The CBOE realized you could apply this methodology to their volatility index and thus the modern VIX was born.
If you are interested in such things, this is the paper that discovered the formula: https://www.semanticscholar.org/paper/More-than-You-ever-Wanted-to-Know-about-Volatility-Demeterfi-Derman/3d9cfbe5ff32fd805f79c85b1e48fa9ac84e9128
https://robinhood.com/support/articles/360001214723/expiration-exercise-and-assignment/ your question got deleted because its the first Google response
Edit: listen to the other wsb responses. Go hit the books
I honestly don’t think so. And it doesn’t seem like a feature. I am not hating on RH (there is enough of that already).
I simply believe that it’s just the way RH works...here is a link to RH saying how they handle options on day of expiration:
https://robinhood.com/us/en/support/articles/360001214723/expiration-exercise-and-assignment/
the besting charting software on the market is tradingview.com
It has a lot of tools to use in terms of indicators and different charts including heikin ashi and renko charts. Although for most stocks it is CBOE data, it costs around 2$ for live market feed from NYSE/NASDAQ afaik. It is much much better than finance yahoo charting that's for sure.
Think Or Swim. Its free. . I personally use tradingview.com, the free stuff, and i like the UI. The think or swim UI, is kinda like from 2002, and its a little rough to get used too, took me like a bunch of hours to get somewhat used to the charting platform. But its a really crazy platform TOS. They have very intricate things like stock screeners, statistics models of standard deviation curves, census data things, its crazy, and its free....
Unfortunately, your premise remains faulty. Compounding interest differs from simple interest.
If I have $1,000, invest, and make 10%. $100 My new principal is $1,100, if I make that same 10%, I now make $110. This is compounding interest. Earning interest on a principal, increasing the principal, and earning interest on that higher amount.
Feel free to check out some credible sources of information vice me so we can skip the colloquial examples.
https://www.investopedia.com/terms/c/compoundinterest.asp
https://www.acorns.com/money-basics/investing/how-does-compound-interest-work/
If you have any Q’s happy to discuss further. Signing off for the evening.
Not knowing your strikes (or spread width), what is your theta for the overall position? Unless the price is deep below your long puts, there is a remnant theta. Let's say you sold the 10 wide IC for $1.35 x 10 contracts. Now, the IC is going for $3.00. This means you still have a long put ITM, but it is losing value due to theta decay. Of course, this may be FAR from what your situation might be, but I look at the theta to determine how much more carnage should I take or simply cut bait. See: https://www.screencast.com/t/oJ5MMYDRewp
Get a paperspace account and install TOS in it. You can then access it through a standard web browser on standard ports, which are unlikely to be blocked. It's $5/month plus $0.10/hour so to save money just open it when you need to trade.
(I don't work for paperspace)
If you want underlying info: https://support.google.com/docs/answer/3093281?hl=en
I believe this only works with Google Sheets (the cloud/Google Drive version of Excel) - not Excel on your PC. I used to use workbooks on my PC to do this, and then a year or two it broke. I think Google moved it to Google Sheets only, which is where I use it now.
I'm pretty sure no built-in function exists to bring in options data. If you want that, you'll need and add-on (likely paid) or find a webpage with consistent locations of options data and then familiarize yourself with "importxml" to figure out how to extract the relevant data from the web page with the option data.
Deep in the money LEAPS on SPY is a simple and effective way to lever up if you are bullish. I don't like to use the word safe, but you could definitely do way worse. Heather Cullen has nice book on the topic suited options beginners. Its an easy read, just a some basic arithmetic.
It’s a book. I ordered mine from Amazon. It’s also come down in price considerably.
Options as a Strategic Investment: Fifth Edition https://www.amazon.com/dp/0735204659/ref=cm_sw_r_cp_api_glt_fabc_4BDQZ2TD8NA5W4ZNT92H
I like this book. I bought the 1st edition (haven't read the 2nd), but i felt that it taught me the greeks (all its definitions) and it was easy to read, but also detailed enough with the right visuals. https://www.amazon.com/Trading-Options-Greeks-Volatility-Pricing/dp/1118133161
https://www.amazon.com/Option-Volatility-Pricing-Strategies-Techniques/dp/155738486X I think this is what you want
I'm not sure what kind of technical background you have, OP, but it may be worth looking into the technical details of options. Books like Options as a Strategic Investment or Paul Wilmott Introduces Quantitative Finance do a great job of describing the math behind options and how they're used on an institutional level. Obviously you don't need to know these things to trade options, but I felt they were a real eye-opener in terms of understanding the kind of effort or technical prowess required to be a competitive trader.
Again, it might not be fair to compare yourself to institutional traders and their methods, but it's difficult to assess how realistic it is to get good enough to make this your main source of income, and these books can give you a sense of how well you understand the landscape of the field.
Have had this happen with some of the online calculators. I use this app
iOS: https://apps.apple.com/us/app/options-profit-calculator/id1471273380 Android: https://play.google.com/store/apps/details?id=com.isaranjha.opc
Helpful and interesting, but I'm still left wondering what I'm supposed to do with the information, you know? I mean, yes, I'm consistently seeing evidence of leptokurtosis (now that I'm looking) as well as skew (which was less surprising to me), but I feel like a monkey that just got its hands on a wrench. Clearly I'm supposed to do something with this, but bashing it against a rock doesn't appear to be doing anything.
I've also been seeing a number of backtests (namely by u/spintwig), showing that selling 30 delta options appears to be profitable overall, which would line up with the leptokurtosis and skew I'm seeing. But other than seeing that both appear to be pointing in the same direction, I feel too dumb to know what else I'm supposed to do, like holding two pieces of a jigsaw puzzle but not knowing what picture I'm putting together. Like maybe it's indicating a more profitable strategy is a 38 delta strategy, or a 25 delta. Or maybe a 38 delta short and a 1 delta long spread (to try and capture the lower volume of intermediate days, but higher volume of large days, that the leptokurtosis is showing). IDK.
So I know someone else has put this together before. I just don't know who.
And I'm in the middle of reading Fooled by Randomness. It's interesting, but I can't say I'm the biggest fan of his writing style. I was planning on finishing this book before deciding if I wanted to read any of his other works.
Well I just bought the 7th edition off of Amazon about 3 hours ago because it was only $10.50. I can let you know Friday if no one else replies.
https://www.amazon.com/gp/product/8131723585/ref=oh_aui_detailpage_o00_s00?ie=UTF8&psc=1
If you want to read some good books on trading in general while you learn, then go with:
- Reminiscences of a stock operator (by Edwin Lefèvre)
- Market Wizards (by Jack Schwager)
- Dark Pools (by Scott Patterson)
These are more general trading stories and trader interviews, but they are regarded as some of the best.
Also start listening to the Chat With Traders podcast. It's amazing and has been one of the gateways into so much content, questions, and knowledge that I would never have known about otherwise. I've also contacted some of the guests and was pleasantly surprised to get a quick response back and still talk to a couple of them.
Do yourself a favor and DO NOT read Intelligent Investor or One Up on Wall Street. They're so old and outdated and were honestly a huge waste of my time.
Hey. There is r/options which will have more info for you on books and info to learn options. In the book "Hedge Fund Market Wizards" they interview the guys and it wasn't just quite a garage set up like the book and movie portray, but it made for a better story. Options are a great way to increase your gains via leverage, but it isn't as easy to get rich from it as they portrayed it to be.
This is not, waste of money no examples, only two pages about the strategy, the rest just typical option intro. Huge font, few pages.
https://www.amazon.com/Wheel-Strategy-Passive-Selling-Journal/dp/B09QP9RSYM
Pricing really depends on many factors:
- the hardware that you choose (more or less CPU power, memory, etc)
- the software package that you choose (with or without MS Office among other things)
- the amount of time you use it.
You can either pay a fixed monthly fee, and then it's on 24/7 and it's ready for you to connect and your applications keep running when you disconnect; or you can pay a variable fee depending on how many hours you use, and after you disconnect it automatically shuts down for you.
Take a look at the pricing page here: https://aws.amazon.com/workspaces/pricing/
As for how much my WorkSpaces environment cost - it's a fraction of brokerage commissions and data providers feed.
For new customers, there's a free tier included - you can use some WorkSpace hours for free to see if you like it. The same pricing page has info about this too.
Those commissions seem very expensive compared to other platforms. I use Robinhood and I don't pay commissions, just sell order transaction fees which are usually between $0.02 and $0.05 depending on size.
> What matters is how you purchase the contracts. If you purchase 10 contracts, or 1, or however many your heart desires, IN A SINGLE BUY ORDER, and then sell any or all of them, that is a single daytrade…if you sell only half the same morning, and then sell the other half later the same day…it is STILL only a single daytrade.
Robin Hood's own documentation disagrees with you.
https://robinhood.com/us/en/support/articles/pattern-day-trading/
This is what they say:
> Orders usually receive a fill at once, but occasionally you might encounter multiple or partial executions. This sometimes happens with large orders, or with orders on low-volume stocks. For regulatory purposes, each execution counts towards your day trade count, so trading low-volume stocks or placing especially large orders may increase your chances of executing a day trade.
This is not normal. This is not how I've ever heard of a sane broker doing things. But this is how Robin Hood does it.
This came up a couple of weeks ago.
Robin Hood says that each EXECUTION is considered to be a separate trade for day trading purposes: https://robinhood.com/us/en/support/articles/pattern-day-trading/
So in other words, if you place an order to sell 10 contracts and all 10 contracts execute together (because someone else out there is looking to buy 10 contracts), then that is a single day trade. Or if it takes 10 executions, then that is 10 day trades.
Unfortunately, there is no guarantee how many executions a particular order is going to take.
To me, this is absolutely insane, and AFAIK it's not how it's done elsewhere.
Hey guys noob here .been putting together a watch list , been keeping my eye on sofi .any one have an idea on where it's goin next week? Was thinking doing a 6.50 or 7$ call .https://robinhood.com/stocks/SOFI
I'm not sure that's the case, or at least not everywhere.
Interestingly, I found Robin Hood's documentation here - https://robinhood.com/us/en/support/articles/pattern-day-trading/
What they say is that they count "executions". So if you have a large order and it gets split into multiple executions, then each one of those is a separate day trade.
Do they give you a history of execution details? That may be something to check - and see if your day trade order was split into multiple executions.
Read the mandatory corporate action section carefully, it seems to goo to be true but it is. And it’s only very few people who took advantage of this….and the OCC is trying hard to change the rules so they don’t have to pay out for something like this like they should. https://robinhood.com/us/en/support/articles/how-corporate-actions-affect-your-options/
It means different things to different brokers, they don't all use the same system, unfortunately.
For RH, it means long or short spreads.
https://robinhood.com/us/en/support/articles/advanced-options-strategies/
Incorrect.
> Multiple buys and sells You start with 0 shares of ABC stock.
> Buy 1 ABC
> Buy 2 ABC
> Buy 7 ABC
> Sell 1 ABC
> Sell 5 ABC
> Sell 4 ABC
> This is one day trade because there is only one change in direction between buys and sells.
Robinhood: Where's the exercise button on my ITM put?
There's some conflicting language from the official documentation https://robinhood.com/us/en/support/articles/expiration-exercise-and-assignment/
>Before expiration day, an early exercise request will be submitted immediately if it’s placed during trading between 9 AM ET and 4 PM ET. Please contact us before 5 PM ET if you’d like to cancel the exercise request. Early exercise requests submitted after 4 PM ET will be queued for the next trading day. You can cancel the pending exercise request until 11:59 PM ET. On expiration day, you won’t be able to submit an early exercise request in the app or on the web after 4 PM ET. Please contact us to request an exercise request after 4 PM ET. We will attempt to accommodate exercise requests until 5 PM ET on a best-efforts basis.
So the instructions seem to say
- They will NOT do an automatic early exercise unless requested.
That said, I want to be sure that I have the option to exercise at will (I don't want my ITM put contracts to be sold, i'd rather have them exercised)
- Where's the exercise button on my ITM put???
You need to know all the possible outcomes of each trade you make. Robinhood will attempt to sell the contract ITM approximately 1 hour before the market closes.
Also, fair bit of warning regarding your strategy, you're literally picking up pennies in front of a steamroller.
>I'm not a trader but I just want to take advantage of this high volatility market for some quick cash
Also, this mindset is going to get you burned.
Your first link was a press release, this is the actual order.
https://www.sec.gov/litigation/admin/2020/33-10906.pdf
I agree with you, it looks like they did know that their execution prices were inferior.
However, it was specifically on equity trades, not options. All options orders by every broker goes to market makers, and they do pay for the order flow.
I guess equity orders are liquid enough for other brokers to send directly to the exchange, but Robinhood chose to direct to market makers and collect payment, while agreeing to compensate on price improvement.
But anyway, looks like they do have a process in place now to conduct thorough reviews, and they have started posting their execution statistics on their website.
Btw, stock doesn't affect collateral for CSPs. Only cash. If you have $1,000 of buying power, and $500 is due to margin, you absolutely cannot sell a cash-secured put requiring $1,000.
This is clear on RH's site: https://robinhood.com/us/en/support/articles/options-collateral/
I'm brand new. Just learning, haven't bought anything. There's a company stock I've been eyeing for some puts plays. Please no judgment.
https://robinhood.com/options/chains/a6a9f344-9794-40fe-b8e5-c077613aa2d8
The 16DEC22 $2.5P had been $0.01 for a few days while the stock was tanking. The stock made a turn around on October 6th and has gone up 6% since open Oct 6th. That $0.01 P hit $0.72 yesterday. Then today it hit $2.73. A 27000% gain on a put while the stock is going up. Why and how? Wouldn't a put become less expensive if a stock is increasing in price? Or stay at $0.01? Why would a put increase in value as a stock climbs?
Why would you limit your choice to only 2 brokers? From my experience Webull has a terrible fill quality. TD has better execution quality but then they charge per contract fees.. my main problem with them is that they don't disclose their execution metrics unlike let's say Schwab, Robinhood or Fidelity:
https://robinhood.com/us/en/support/articles/expiration-exercise-and-assignment/
​
>If you don’t have enough buying power to exercise your option, we’ll typically attempt to sell the contract in the market for you about 1 hour before it expires
you can try Strikes mobile app, it's free but data is 15min delayed if that's ok with you. For actual trading from europe I'd suggest interactive brokers, you cannot go wrong with ibkr..
Hacking the Holy Grail - the trader's guide to cracking the code of profitability.
I also recommend this book, plenty of good information there:
https://www.amazon.com/Options-Strategic-Investment-Lawrence-McMillan/dp/0735201978
Yes, and it's way, way easier on my eyes than wearing contacts. Hmm.. I find turning down the contract and brightness on my lcd monitors helps a ton. The eye strain is much, much worse at night, so I run ( https://justgetflux.com/ ) to help filter out the blue light. I think if you start filtering out the blue light at night, it will help your eyes feel better during the day.
STO = Sell to Open (the trade)
In this case, we're talking about shorting a put. To short means to sell something. We're selling a put option contract to our opponent, called the counter-party.
SPY is the name of an ETF comprised of shares of stock in the S&P 500 companies. We could use SPY, AAPL, GOOG, or any other "underlying" that has options.
DTE = days to expiration. Every option expires. DTE = 12, for example, is a way of saying that there are only 12 days until a particular option expires.
You can learn about these things in a gentle way by reading the first 30 pages or so of Brian Overby's The Options Playbook. He also has a companion website.
Use Price Action with multiple timeframes. Read This.
u/interesting-Code2075 I am John Saunders. I trade currently BBBY only. Covered calls. Earning money. Good volatility. Be sure to learn my tactics and more here. I made the #1 new release status in Business Math Skills! Meme stock business mathematics skills made.
Buy Options as a Strategic Investment. https://www.amazon.com/Options-as-Strategic-Investment-Fifth-dp-0735204659/dp/0735204659/
It is in its fifth edition. Thus, it is a good book because junk books never even make it to the second edition.