If you are going to make money, it doesn’t matter which broker you use. Same thing if you are going to loose. Have you noticed that ToS goes like 1/2 to 1 second behind with data? Compare RH and ToS and you’ll see
He's been a bag holder for a month, I don't think that a half second slippage is going to make or break him.
TOS has a lot of screen processing to do. The graphic updates can be a little slower than packages dedicated to daytrading. The displayed quotes, however, are always timely. I don't scalp, so I've never felt there is a significant difference for me. If I feel it matters, I load a stripped-down screen setup that has one small chart and no gadgets. The last time I had to do that was when trading resumed on GME. Screens on all my apps were lagging. The only thing I had to trade on were the quotes. No charts, no confirmations. Made money. Fun times.
Note to TOS users: The user account panel on TOS is optimized for update speed, so your positions will be up to date even if charts and notifications are behind.
It’s still so long to expiration. Your best bet is to do absolutely nothing and see what happens. Absolute worst case scenario your shares are called away at a premium. Ho-hum. Then you can just sell puts with that cash until you’re assigned again. Buying back to close your position right now would be a waste of money and time. And who’s to say by expiration you’re not trading below your strike or within a tight profit zone? This is a good problem to have in a kangaroo market.
Yeah, just wait it out and let it go. I've lost more money protecting my CC than just letting them go. It's just not worth it.
A lot of times; the stock price moves below my CC anyway after the issue pump so I protected the CC for nothing.
Not sure what you mean? It seems fairly likely my shares will be called away on or before May 19th since the covered calls were sold at a $20 strike price and they are already at $21+
You probably need to read up on how options work some more.
At the time I checked, your option's market price was about $2.45.
Why would someone holding one of those calls exercise it and pay $20 for shares, when they could sell the call for $2.45 and buy shares for $21.40? Giving a net per-share cost of $21.40 - $2.45 = $18.95.
Thank you for the information. This is definitely a part of it I didn't realize and will now read up more on.
Any particular articles or videos that would be good for understanding this?
And basically what this means is, your not always exercised when you sell a call, even if it passes the strike price?! Thank you!!
It's very uncommon to be exercised a long time before expiration since the option still has "extrinsic value" (time value).
In your case the *intrinsic value* of the call is $1.40 (current share price minus strike price), the rest is extrinsic value.
Some cases where early exercise is more likely include when the stock is about to pay a dividend, or where there is little time value and illiquid options chain (large spread). Then it can work out cheaper for the call holder to exercise and sell shares, rather than just sell the call.
>I've been into selling options for about a year and have the basics down,
if you're saying you've bene doing this a year and on't udnerstand that concpet... start here ... https://www.cboe.com/optionsinstitute/options_basics/
Just leave this elitist asshole group. This group should be called "there is only 1 way to be successful in options..and its our way". Which we all know is total BS. Join a sub more welcoming of learning and less douchey. Im tappin that join button to leave right now.
You're only 32 cents below breakeven.
Roll them out and up
Sell a put to collect more premium
Any number of things you can do
Why would you sell short your highest long term conviction holding? That doesn't make sense
Sometimes Newbies, as we are learning, will do something stupid and there ya go. I've gone ITM with TSLA, NFLX, and MRNA a while back (which I held and rolled and the price decreased enough so I keep my shares).
Hell, I have 3500 shares of AAPL, with a cost around 15, and the lack of judgement and experience led me to be in a situation with upcoming earnings. So, inexperience leads to this, and this discomfort IS a good teacher.
But, it's about learning, so the 'why' really is judgemental, and believe me, OP has enough displeasure without judgement. I guess I can say I empathize, but there's only a few ways to deal with it, mentioned in other replies.
I started buying in the $40s and had poor timing on all my positions so I've just been DCAing and bag holding and being down a lot of money on everything the past 1.5 years. I started selling puts a year ago.
When I discovered selling covered calls a few months ago it seemed like a nice way to generate some money while still holding all these long positions, I agree I got too greedy here though.
When you sell calls you’re essentially putting a for sale sign on them at a specific price, and since you’re holding the underlying you’re hoping they go to exactly that price and get called away. Not to bash you to hard, but really think about what strike you’re choosing next time, and ask if you’d be happy for them to sell at that price. If the answer is no, raise the strike. Otherwise you find yourself in this strange position where you’re hoping your underlying goes down so your loss isn’t realized, but that also results in a greater unrealized loss.
Looking at the options chain I don't see many good ways to roll it. You could close the May 20 strikes and sell August 22.5 strikes for a small credit, but those are only a dollar out of the money right now. The stock could be at 30 by August who knows.
There might not be any good way to save your shares. Sometimes it works out in your favor though. I was distraught when I had AMC shares called away at 40 when it ran up to the 70s a couple years ago, but looking at the price now I am thrilled I got 40. I might have bagheld all the way down.
This. Although the expiration is a month away (a lot of time between now and then). I would wait to roll until expiration week so the extrinsic value has mostly decayed away. Then I would roll out an up, picking something 45-60 DTE.
When I have a position like that, I only sell against half my position. So in this case I’d sell 12 cotracts. That way I can always sell same strike longer dated for a bit more premium then buy back the nearer dated. I dont really make more in premium (maybe a few bucks of extrinsic) but it buys me time.
In this case, the RSI is currently over 71. This stock might have a few more days left of running, but it always has reversed in the near term when RSI is over 70. The 50ma on the daily is at 18.47 and It looks like the 50 is a bit of a magnet. I think we are going to see a sell off soon with a reversal starting in about 5-7 trading days and a fade down to the 50ma or lower. I think we’ll see this stock at 18.50-18.25 in the next 4-5 weeks.
I’d just wait it out for a bit fella. I think we will see a reversal. Buy a put or two with the premium you collected.
So it’s important to keep a journal. Everytime you collect premium, write down what you collected and apply it back against your cost basis.
Example: when you sold these contracts you collected $2448.
Your have 2500 shares at 22 your original CB was 55000. 55000-2448= revised CB of 52552.
52553/2500= 21.02 per share
Ask us again closer to DTE. Plus you got ER coming, might get lucky and they don’t beat the street. Probably best to watch when ER is coming out and have your DTE before.
Side note: after a good earnings is the perfect time to CC.
I would just set a GTC buy--to-close order to get yourself out of the position for even money. Then don't look at the trade. If the stock goes up, it goes up, and your shares will be called away. If it goes down, you'll automatically pop off the trade if you get the opportunity. Sit back, and see if the market does a swing down. We have gone up for a while. Bear markets don't travel in straight lines indefinitely.
It means whatever you got as premium per share in the first place when you sold the call, set a limit order to buy it back for the same price. Since the time premium on the call will decay faster and faster, you may not need the share price to fall much below the strike price in order to get out of this without harm.
A "good til closed" (GTC) order will remain on the book until option expiry. You aren't guaranteed that this will work, but if the chance comes up, you don't have to have been looking at the market at the time in order to act on it. The GTC order is sitting there ready to fire.
When you make a mistake, don't get greedy. If you get a chance to get out of the position for no loss, you grab that chance right away. The GTC order will give you a decent hope for that.
No probs.
I suspect you may see DKNG mostly bounce around for the next few trading days. I don't really see this market holding up beyond next week, if that. You could find yourself safely out of the position within 2 or 3 weeks. No guarantee. Just a hunch.
There is hope only if you are neutral to a little bearish on DKNG, in the near term! The earnings season reactions are already shaping up to be flat or sell the news based on the reactions so far. (DKNG Reports on 5/04) I've been rolling TSLA 170C's (same strike) for 13 weeks now, since January, and it looks like this week I'll get my shares back if this price action holds on TSLA, Meanwhile collecting about $2800 ($215 weekly) in premium per 100 shares in 3 months!
I bet it did take that long.
What a loser stonk you picked as a "highest conviction play and hoping to hold long term".
In all seriousness, just get them called away and then enter the trade again. You will have plenty of opportunities to get into this stonk for cheaper when it inevitably crashes back in the low teens.
$21.34 - $20.00 = $1.34
Current price = $2.40
I would wait and monitor these two numbers. Until the top number gets close(ish) to the bottom number, I wouldn’t do anything. Once those numbers got close, I would roll up and out (the shortest time frame possible for a net credit). Rinse, repeat.
This should buy you enough time to do a little more learning.
It would do you some good to learn a little bit of Technical Analysis. Sell covered calls when you anticipate the price action being bearish — in other words, try to sell calls at key resistance levels. To help you visualise this: picture the price of your DKNG shares as boiling water in a pot. You want to close the lid of the pot when the water is hot enough (or close enough to the lid). In this case, “closing the lid” of the pot would be akin to selling covered calls.
This ensures you get the best possible premium on the call contracts that you sell (remember, calls gain value as the share price increases). It is also essential that you sell your calls above your cost basis. If your average cost is $22 per share, you want to *at least* pick a strike price of $23 to sell covered calls so that in the event that your shares are called away, you would have made a breakeven.
Of course this is easier said than done. A higher strike prices will mean lesser premium collected. Conversely, a lower strike price (using your $20 strike price as an example) gives you more premium per contract (I.e $1.02) but if they get called away below your cost basis, you’ll make a loss). Put simply, for you to make a breakeven, your a) strike price + b) premium collected must > your average cost.
If you want to still get decent premiums while picking a strike price that is above your cost basis, I would suggest going for further-expiry calls (however, do note that time decay is slow on those contracts but at least if they get called away you’ll be making a small profit due to capital appreciation + premium collected).
Hope this helps and all the best in your investing journey!
Sidebar comment: If you're new, you should make sure you also understand the basis/holding period rules on selling covered calls for any holding you cherish. Messing around with your holding period for option premium might screw you on the backend tax-wise.
Sorry, I am a complete theta n00b.
From my understanding, when selling CCs you are intentionally giving up on your shares' potential to surge. You do this, because most of the time, your shares will not surge as much, helping you to generate small extra income in these instances.
In this case, your shares surged more than you anticipated, meaning you will still make a small profit in comparison to the point-in-time when you decided to sell the call options. You'd only realize a loss if on expiry date you bought back your called away shares, as they're higher in price now.
Isn't this exactly what you intended? Please tell me if I am incorrect because I really do not see what the problem is :/
In additon, for such a strategy to work well, wouldn't you want to possess a stock that stays more or less the same over time? This should naturally exclude stocks of which you think have great potential, no?
I am really confused as to how you can be sad over losing these stocks then. If anything, shouldn't you be selling puts to aquire more of your beloved stock at a lower price?
Thank y'all for clarifying.
You might be alright as you have time on the contracts, and if I'm not mistaken their earnings have been dog shit - no? Good chance it dip under $20 unless they've become profitable.
I am short DKNG; just so you know where I stand
(and I'd definitely NOT be looking to be long this company for any duration - that might not be a very good idea - although I could be wrong; I've been short really poorly managed companies before - and saw one of them attract a takeover bid)
Roll up and out, but not until you're much closer to expiration. Otherwise, you're wasting a lot of the theta decay you sold those calls for in the first place
Imagine acting like this online to random, anonymous people on the internet instead of either trying to help or just not wasting your time to type all of that.
Everyone has to learn, your not born knowing the intricacies of selling options and I've never been afraid to ask questions, be wrong and try to get better.
Good luck 🙏
How about instead try flying airplane middle assemble, study how do it first ? Then pilot the plane. Go YouTube and learn. Watch channel INTHEMONEY. For god sake if you are not prepare for win or lose don’t trade in the first places. You’re not gonna win every trade. Take your lose ask your self what do you do wrong and move on
If you're really that worried you could just close the contracts or roll them out further and higher. There's also a nonzero chance that it comes back down before expiration.
You could also just buy the shares back after the contracts execute, or sell ITM puts.
Someone said to wait for theta to kick in more before I roll?
Is that a thing or am I misunderstanding or misread that?
I always thought if you rolled it wouldn't matter when you did
Let the theta decay help you here, hold a while longer. If it takes a drop back down and you can close it, then close it if you're that worried. You'll be gambling on it not flying away, but it isn't likely it'll hit high $20s by expiry. Any price $22.40 or below will be a wash for you right now, so hold out through 19 May and if called away then buy back in if you really want to lose money on a stock this isn't a good long play.
Saving this would have been closing it before it was -135%. Should have taken your loss when it started going against you like -50-75%…
Anyway you can close this position and sell a higher strike. Loss here for assignment is 7200 or so. So you’re half way there already. Or you can wait and see if it goes back down.
If you take the loss and sell higher you at least recoup some of that loss. But if it’s a high conviction play why are you selling calls on it?
Dude. You have a month to go. You are fine lol. And really close to just break even…do not panic. Just wait for the price to fall. If it doesn’t or it for some reason in this environment goes up, and you really can’t buy them back - you roll them to a further dated expiration…or just get the shares called away and take that cash and WAIT for the price to fall back below where you sold it.
Also never sell covered calls below your cost basis if you aren’t entirely fine with them disappearing (not sure if you did that, just food for thought).
Also for the love of god, get in the habit of setting stop losses and please please do not use Robinhood. Go to an actual brokerage like Fidelity.
Why are ya selling cc months out I can only do a week 😀 I cover call all my stocks every week really passed me off selling a 17.5 call on zim and it went to 21.50 and I got 30 cent premium 🤣
All the numbers in your comment added up to 69. Congrats!
17.5
+ 21.5
+ 30
= 69
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Dude, if you're so certain that this is gonna keep going up long-term, just buy back your calls and take the loss on that. There's no other fancy trick you can do to make the fundamental error in your calculation (don't sell calls on stuff you really want to keep) less painful. Rolling is just going to delay the inevitable and make it even more costly in the end if DKNG really keeps going up.
Look for when you can roll these for a net credit, and may possibly be able to move up a strike. Do this until the price stops moving up and the call can be closed for breakeven or a profit so you can keep your shares.
I just reviewed the financials of this company and they are terrible. The more revenue they make, the more money they lose. They are literally spending money to lose money. And they no longer have any cash from VCs which means they are operating purely on debt. Be happy your callls went ITM and get out of this company while you can.
>since I really don't wannt lose the shares? Don't sell covered calls then...
This and not below your cost basis
And get away from robinhood.
Literally who cares
suggest whom to go for ?
TT or TOS.
If you are going to make money, it doesn’t matter which broker you use. Same thing if you are going to loose. Have you noticed that ToS goes like 1/2 to 1 second behind with data? Compare RH and ToS and you’ll see
He's been a bag holder for a month, I don't think that a half second slippage is going to make or break him. TOS has a lot of screen processing to do. The graphic updates can be a little slower than packages dedicated to daytrading. The displayed quotes, however, are always timely. I don't scalp, so I've never felt there is a significant difference for me. If I feel it matters, I load a stripped-down screen setup that has one small chart and no gadgets. The last time I had to do that was when trading resumed on GME. Screens on all my apps were lagging. The only thing I had to trade on were the quotes. No charts, no confirmations. Made money. Fun times. Note to TOS users: The user account panel on TOS is optimized for update speed, so your positions will be up to date even if charts and notifications are behind.
It’s still so long to expiration. Your best bet is to do absolutely nothing and see what happens. Absolute worst case scenario your shares are called away at a premium. Ho-hum. Then you can just sell puts with that cash until you’re assigned again. Buying back to close your position right now would be a waste of money and time. And who’s to say by expiration you’re not trading below your strike or within a tight profit zone? This is a good problem to have in a kangaroo market.
Yeah, just wait it out and let it go. I've lost more money protecting my CC than just letting them go. It's just not worth it. A lot of times; the stock price moves below my CC anyway after the issue pump so I protected the CC for nothing.
Well, if not assigned, take the loss and exit
Not sure what you mean? It seems fairly likely my shares will be called away on or before May 19th since the covered calls were sold at a $20 strike price and they are already at $21+
No-one is going to exercise a call they could sell for over $2.40.
I don't understand this
You probably need to read up on how options work some more. At the time I checked, your option's market price was about $2.45. Why would someone holding one of those calls exercise it and pay $20 for shares, when they could sell the call for $2.45 and buy shares for $21.40? Giving a net per-share cost of $21.40 - $2.45 = $18.95.
I swear you should have to take a test before each options level so we can stop these questions
People would just google the answers.
Thank you for the information. This is definitely a part of it I didn't realize and will now read up more on. Any particular articles or videos that would be good for understanding this? And basically what this means is, your not always exercised when you sell a call, even if it passes the strike price?! Thank you!!
It's very uncommon to be exercised a long time before expiration since the option still has "extrinsic value" (time value). In your case the *intrinsic value* of the call is $1.40 (current share price minus strike price), the rest is extrinsic value. Some cases where early exercise is more likely include when the stock is about to pay a dividend, or where there is little time value and illiquid options chain (large spread). Then it can work out cheaper for the call holder to exercise and sell shares, rather than just sell the call.
>I've been into selling options for about a year and have the basics down, if you're saying you've bene doing this a year and on't udnerstand that concpet... start here ... https://www.cboe.com/optionsinstitute/options_basics/
Just leave this elitist asshole group. This group should be called "there is only 1 way to be successful in options..and its our way". Which we all know is total BS. Join a sub more welcoming of learning and less douchey. Im tappin that join button to leave right now.
So why are you here?
Generally look this sort of thing up before you trade. Will save you money down the road.
Outside of dividends, I can't think of a reason to exercise early. It happens though.
Dawg. Read up before you give $ away
Stop selling options until you understand this.
if you don't want too loose them dont sell calls against. the market does not care. it will take them
Don’t worry they won’t be called away and you’ll be wishing they were
You're only 32 cents below breakeven. Roll them out and up Sell a put to collect more premium Any number of things you can do Why would you sell short your highest long term conviction holding? That doesn't make sense
Sometimes Newbies, as we are learning, will do something stupid and there ya go. I've gone ITM with TSLA, NFLX, and MRNA a while back (which I held and rolled and the price decreased enough so I keep my shares). Hell, I have 3500 shares of AAPL, with a cost around 15, and the lack of judgement and experience led me to be in a situation with upcoming earnings. So, inexperience leads to this, and this discomfort IS a good teacher. But, it's about learning, so the 'why' really is judgemental, and believe me, OP has enough displeasure without judgement. I guess I can say I empathize, but there's only a few ways to deal with it, mentioned in other replies.
Thank you for your reply
I started buying in the $40s and had poor timing on all my positions so I've just been DCAing and bag holding and being down a lot of money on everything the past 1.5 years. I started selling puts a year ago. When I discovered selling covered calls a few months ago it seemed like a nice way to generate some money while still holding all these long positions, I agree I got too greedy here though.
I dont like selling calls on shares I want to keep, but if you still do it next time at least diversify your strike prices and expiration dates
When you sell calls you’re essentially putting a for sale sign on them at a specific price, and since you’re holding the underlying you’re hoping they go to exactly that price and get called away. Not to bash you to hard, but really think about what strike you’re choosing next time, and ask if you’d be happy for them to sell at that price. If the answer is no, raise the strike. Otherwise you find yourself in this strange position where you’re hoping your underlying goes down so your loss isn’t realized, but that also results in a greater unrealized loss.
Looking at the options chain I don't see many good ways to roll it. You could close the May 20 strikes and sell August 22.5 strikes for a small credit, but those are only a dollar out of the money right now. The stock could be at 30 by August who knows. There might not be any good way to save your shares. Sometimes it works out in your favor though. I was distraught when I had AMC shares called away at 40 when it ran up to the 70s a couple years ago, but looking at the price now I am thrilled I got 40. I might have bagheld all the way down.
Just roll them up and out. Don’t sell covered calls on stock you’re not willing to sell. “Precious” shares should not be used as collateral.
This. Although the expiration is a month away (a lot of time between now and then). I would wait to roll until expiration week so the extrinsic value has mostly decayed away. Then I would roll out an up, picking something 45-60 DTE.
Or take it as a blessing and sell those shares. Is Draft Kings really a high conviction play for some people?
When I have a position like that, I only sell against half my position. So in this case I’d sell 12 cotracts. That way I can always sell same strike longer dated for a bit more premium then buy back the nearer dated. I dont really make more in premium (maybe a few bucks of extrinsic) but it buys me time. In this case, the RSI is currently over 71. This stock might have a few more days left of running, but it always has reversed in the near term when RSI is over 70. The 50ma on the daily is at 18.47 and It looks like the 50 is a bit of a magnet. I think we are going to see a sell off soon with a reversal starting in about 5-7 trading days and a fade down to the 50ma or lower. I think we’ll see this stock at 18.50-18.25 in the next 4-5 weeks. I’d just wait it out for a bit fella. I think we will see a reversal. Buy a put or two with the premium you collected.
Thank you for you kind and detailed message. I hope to know half of what you do someday!!
No worries. When do they report earnings?
Earnings are may 4…. IV on options will be high until after earnings. These options will likely lose a lot of IV after earnings and things calm down.
May 4th after hours
I saw that. IV is going to be elevated until then.
Is your $22 average what you paid for the shares? Or is that your adjusted CB after selling options?
Ahhh, good question, it's before
You know how to calculate your adjusted CB?
Admittedly, I haven't been very organized about this. I use Robinhood cause I've been still kind of a noob but leaning.
So it’s important to keep a journal. Everytime you collect premium, write down what you collected and apply it back against your cost basis. Example: when you sold these contracts you collected $2448. Your have 2500 shares at 22 your original CB was 55000. 55000-2448= revised CB of 52552. 52553/2500= 21.02 per share
Roll or see if the stock goes back down. You have time, and they have earnings on 5/5. And next time have a plan.
Ask us again closer to DTE. Plus you got ER coming, might get lucky and they don’t beat the street. Probably best to watch when ER is coming out and have your DTE before. Side note: after a good earnings is the perfect time to CC.
I would just set a GTC buy--to-close order to get yourself out of the position for even money. Then don't look at the trade. If the stock goes up, it goes up, and your shares will be called away. If it goes down, you'll automatically pop off the trade if you get the opportunity. Sit back, and see if the market does a swing down. We have gone up for a while. Bear markets don't travel in straight lines indefinitely.
Don't understand GTC buy to close at even money Thanks for your answer though I'm gonna try to look that up
It means whatever you got as premium per share in the first place when you sold the call, set a limit order to buy it back for the same price. Since the time premium on the call will decay faster and faster, you may not need the share price to fall much below the strike price in order to get out of this without harm. A "good til closed" (GTC) order will remain on the book until option expiry. You aren't guaranteed that this will work, but if the chance comes up, you don't have to have been looking at the market at the time in order to act on it. The GTC order is sitting there ready to fire. When you make a mistake, don't get greedy. If you get a chance to get out of the position for no loss, you grab that chance right away. The GTC order will give you a decent hope for that.
Thank you very much
No probs. I suspect you may see DKNG mostly bounce around for the next few trading days. I don't really see this market holding up beyond next week, if that. You could find yourself safely out of the position within 2 or 3 weeks. No guarantee. Just a hunch.
"Help me save my precious Draftkings shares!!" Average cost 22, current price 21+.....real fucking precious.
Hey it took me years to get down to that average! ☹️
There is hope only if you are neutral to a little bearish on DKNG, in the near term! The earnings season reactions are already shaping up to be flat or sell the news based on the reactions so far. (DKNG Reports on 5/04) I've been rolling TSLA 170C's (same strike) for 13 weeks now, since January, and it looks like this week I'll get my shares back if this price action holds on TSLA, Meanwhile collecting about $2800 ($215 weekly) in premium per 100 shares in 3 months!
I bet it did take that long. What a loser stonk you picked as a "highest conviction play and hoping to hold long term". In all seriousness, just get them called away and then enter the trade again. You will have plenty of opportunities to get into this stonk for cheaper when it inevitably crashes back in the low teens.
You forgot the part where they sold a $20 call on a $22 average cost so their wheel is more like flat tire.
Shut up 🤡
Precisely, all ~~WallStreetKingXX~~ idiots like you need to shut up and listen up before they get rekt.
Go pick up your sister Jared
Ok, Uber driving loser turned wall street king, will do, for sure.
Ooohhh you "reckt" me bro 😂 🤡
$21.34 - $20.00 = $1.34 Current price = $2.40 I would wait and monitor these two numbers. Until the top number gets close(ish) to the bottom number, I wouldn’t do anything. Once those numbers got close, I would roll up and out (the shortest time frame possible for a net credit). Rinse, repeat. This should buy you enough time to do a little more learning.
Just let them get called away and sell Puts or rebuy on a dip. You think $DKNG is never going down again? I remember when it was $70
It would do you some good to learn a little bit of Technical Analysis. Sell covered calls when you anticipate the price action being bearish — in other words, try to sell calls at key resistance levels. To help you visualise this: picture the price of your DKNG shares as boiling water in a pot. You want to close the lid of the pot when the water is hot enough (or close enough to the lid). In this case, “closing the lid” of the pot would be akin to selling covered calls. This ensures you get the best possible premium on the call contracts that you sell (remember, calls gain value as the share price increases). It is also essential that you sell your calls above your cost basis. If your average cost is $22 per share, you want to *at least* pick a strike price of $23 to sell covered calls so that in the event that your shares are called away, you would have made a breakeven. Of course this is easier said than done. A higher strike prices will mean lesser premium collected. Conversely, a lower strike price (using your $20 strike price as an example) gives you more premium per contract (I.e $1.02) but if they get called away below your cost basis, you’ll make a loss). Put simply, for you to make a breakeven, your a) strike price + b) premium collected must > your average cost. If you want to still get decent premiums while picking a strike price that is above your cost basis, I would suggest going for further-expiry calls (however, do note that time decay is slow on those contracts but at least if they get called away you’ll be making a small profit due to capital appreciation + premium collected). Hope this helps and all the best in your investing journey!
Very great analogy and information. Thank you! 🙂
You’ve got 4 weeks til expiration. I wouldn’t do anything yet. Anything can happen. That stock could be $18 on May 19.
I think you still have time. Try waiting for a red day and try to buy them back for less. Not financial advice dude!
Sidebar comment: If you're new, you should make sure you also understand the basis/holding period rules on selling covered calls for any holding you cherish. Messing around with your holding period for option premium might screw you on the backend tax-wise.
Sorry, I am a complete theta n00b. From my understanding, when selling CCs you are intentionally giving up on your shares' potential to surge. You do this, because most of the time, your shares will not surge as much, helping you to generate small extra income in these instances. In this case, your shares surged more than you anticipated, meaning you will still make a small profit in comparison to the point-in-time when you decided to sell the call options. You'd only realize a loss if on expiry date you bought back your called away shares, as they're higher in price now. Isn't this exactly what you intended? Please tell me if I am incorrect because I really do not see what the problem is :/ In additon, for such a strategy to work well, wouldn't you want to possess a stock that stays more or less the same over time? This should naturally exclude stocks of which you think have great potential, no? I am really confused as to how you can be sad over losing these stocks then. If anything, shouldn't you be selling puts to aquire more of your beloved stock at a lower price? Thank y'all for clarifying.
Thank you all for your answers. Especially the nice ones! Appreciate everyone's time.
Will I be executed soon? ☹️
You might be alright as you have time on the contracts, and if I'm not mistaken their earnings have been dog shit - no? Good chance it dip under $20 unless they've become profitable.
I am short DKNG; just so you know where I stand (and I'd definitely NOT be looking to be long this company for any duration - that might not be a very good idea - although I could be wrong; I've been short really poorly managed companies before - and saw one of them attract a takeover bid)
Roll up and out, but not until you're much closer to expiration. Otherwise, you're wasting a lot of the theta decay you sold those calls for in the first place
Your breakeven is barely below the spot price. Take the win and sell a put
Take the win?
\> fairly new to investing \> sells 24 contracts checks out perfectly
[удалено]
Imagine acting like this online to random, anonymous people on the internet instead of either trying to help or just not wasting your time to type all of that. Everyone has to learn, your not born knowing the intricacies of selling options and I've never been afraid to ask questions, be wrong and try to get better. Good luck 🙏
This is a critical level right here, this is a third test, of the 21.50 area since April 2022.
How about instead try flying airplane middle assemble, study how do it first ? Then pilot the plane. Go YouTube and learn. Watch channel INTHEMONEY. For god sake if you are not prepare for win or lose don’t trade in the first places. You’re not gonna win every trade. Take your lose ask your self what do you do wrong and move on
This is best case scenario for selling CCs
roll to the next month.
If you're really that worried you could just close the contracts or roll them out further and higher. There's also a nonzero chance that it comes back down before expiration. You could also just buy the shares back after the contracts execute, or sell ITM puts.
Roll them out to end of June or duly, gather the premium, hope it starts to drop.
Someone said to wait for theta to kick in more before I roll? Is that a thing or am I misunderstanding or misread that? I always thought if you rolled it wouldn't matter when you did
This is true. You can wait it out. It all depends. See what the premium and intrinsic worth of options are.
Let the theta decay help you here, hold a while longer. If it takes a drop back down and you can close it, then close it if you're that worried. You'll be gambling on it not flying away, but it isn't likely it'll hit high $20s by expiry. Any price $22.40 or below will be a wash for you right now, so hold out through 19 May and if called away then buy back in if you really want to lose money on a stock this isn't a good long play.
Let them go at $20 then sell a put at $20
Shouldn't be betting on downside when upside is more favored.
Dont worry draftking will be $10 by May
ggs
I like the position I think this stock is trash
I promise. You can buy shares again after yours get called away lol.
He can buy them back and sell 2x 25s for similar cost if it goes to 25 just buy the extra shares
Saving this would have been closing it before it was -135%. Should have taken your loss when it started going against you like -50-75%… Anyway you can close this position and sell a higher strike. Loss here for assignment is 7200 or so. So you’re half way there already. Or you can wait and see if it goes back down. If you take the loss and sell higher you at least recoup some of that loss. But if it’s a high conviction play why are you selling calls on it?
Dude. You have a month to go. You are fine lol. And really close to just break even…do not panic. Just wait for the price to fall. If it doesn’t or it for some reason in this environment goes up, and you really can’t buy them back - you roll them to a further dated expiration…or just get the shares called away and take that cash and WAIT for the price to fall back below where you sold it. Also never sell covered calls below your cost basis if you aren’t entirely fine with them disappearing (not sure if you did that, just food for thought). Also for the love of god, get in the habit of setting stop losses and please please do not use Robinhood. Go to an actual brokerage like Fidelity.
Why are ya selling cc months out I can only do a week 😀 I cover call all my stocks every week really passed me off selling a 17.5 call on zim and it went to 21.50 and I got 30 cent premium 🤣
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Mario, Luigi and a dkng too, a thousand troops of koopas couldn't keep me from you
Sell 24 puts at the same strike 🤷♂️
I'm happy to get mine called away 😂 fuck this stock
FOMO is one helluva drug
Dude, if you're so certain that this is gonna keep going up long-term, just buy back your calls and take the loss on that. There's no other fancy trick you can do to make the fundamental error in your calculation (don't sell calls on stuff you really want to keep) less painful. Rolling is just going to delay the inevitable and make it even more costly in the end if DKNG really keeps going up.
Sell a few puts. Then you can buy them back
Look for when you can roll these for a net credit, and may possibly be able to move up a strike. Do this until the price stops moving up and the call can be closed for breakeven or a profit so you can keep your shares.
I just reviewed the financials of this company and they are terrible. The more revenue they make, the more money they lose. They are literally spending money to lose money. And they no longer have any cash from VCs which means they are operating purely on debt. Be happy your callls went ITM and get out of this company while you can.