Options trading

Mad_maxx

Bawa wrote: »

Read the book Options as a Strategic Investment by McMillan. If you don't know what you are doing, you will lose all your money.

you only invest small amounts in options , nobody is going to be putting up 10 k or even 1 k in the majority of cases

you quickly know if an option trade is going to work out , i usually buy ten days out from expiry or thereabouts and will often close within a few days as its clearly melting away to nothing , that way i save some of my initial spend

thee odd time il spend $50 even on the day of expiry , did it yesterday with BBBY , pocketed $30 euro profit , purely for fun

shakedown

Mad_maxx wrote: »

who said it was " investing " ?

options trading isnt investing in anyway shape or form , its at best a hedge if you buy far out Puts

Gamestop is very much in the news right now so the " hindsight " point is kind of pointless , everything about Gamestop is gambling , those in it ( on this site ) are well aware of that

You called it investing yourself, in the post I quoted. But not to worry, I get what you're trying to say. Best of luck.

shakedown

gvgdhar wrote: »

Hi,
Which trading platforms do you use for options trading? I am looking to do simple Sell call and puts. Can someone suggest where can I do this?

I am using Degiro for my regular stock investments. I couldn't find Sell Call/put options for US equities. Can someone guide please?
Thank you
Girihdar

Tastyworks has US options and you can deposit via Currency Fair. Otherwise, Interactive Brokers as the other poster said.

GalwayMagpie

Mad_maxx wrote: »

you only invest small amounts in options , nobody is going to be putting up 10 k or even 1 k in the majority of cases

you quickly know if an option trade is going to work out , i usually buy ten days out from expiry or thereabouts and will often close within a few days as its clearly melting away to nothing , that way i save some of my initial spend

thee odd time il spend $50 even on the day of expiry , did it yesterday with BBBY , pocketed $30 euro profit , purely for fun

Selling options can be a quite profitable pastime.

cronos

GalwayMagpie wrote: »

Selling options can be a quite profitable pastime.

Tell us more

Davauer

I bought 5000 Gamestop at 6 dollars and sold it at 310 dollars

gvgdhar

shakedown wrote: »

Tastyworks has US options and you can deposit via Currency Fair. Otherwise, Interactive Brokers as the other poster said.

Thank you. which one do you recommend for a starter.

shakedown

gvgdhar wrote: »

Thank you. which one do you recommend for a starter.

I have accounts on both, but have only used tastyworks for options as it does everything I need, and im used to the interface now. But it’s a pain getting money in/out using currency fair.

It has, and heavily recommends using, built in strategies (vertical spreads, covered calls, iron condors etc.) which are less risky than the naked call/puts that most of WSB does.

gvgdhar

shakedown wrote: »

I have accounts on both, but have only used tastyworks for options as it does everything I need, and im used to the interface now. But it’s a pain getting money in/out using currency fair.

It has, and heavily recommends using, built in strategies (vertical spreads, covered calls, iron condors etc.) which are less risky than the naked call/puts that most of WSB does.

Thank you.
If we have to do covered calls, we need to maintain stock too in the same account. Charges for stocks on tastyworks appear on the higher side with $5 flat per transaction against IBKR where its $1 (can be $2 including for closing). Tastyworks can be expensive if one is to buy stocks in small lots.
If the idea is to concentrate on just Sell Call and Puts with the intention of accumulating stocks at a lower price and earning a premium on the Sell-Calls, will IBKR serve the purpose?

shakedown

gvgdhar wrote: »

Thank you.
If we have to do covered calls, we need to maintain stock too in the same account. Charges for stocks on tastyworks appear on the higher side with $5 flat per transaction against IBKR where its $1 (can be $2 including for closing). Tastyworks can be expensive if one is to buy stocks in small lots.
If the idea is to concentrate on just Sell Call and Puts with the intention of accumulating stocks at a lower price and earning a premium on the Sell-Calls, will IBKR serve the purpose?

You’re talking about running the wheel strategy (if not, look it up, as it sounds like what you want to do)?

Both platforms can do that - but you’ll need to manage all the buying/selling yourself. You don't need to buy the stock - just sell puts and have enough cash in the account for when you eventually get assigned. Saves you the $5 fee if that’s what you’re concerned about.

gvgdhar

shakedown wrote: »

You’re talking about running the wheel strategy (if not, look it up, as it sounds like what you want to do)?

Both platforms can do that - but you’ll need to manage all the buying/selling yourself. You don't need to buy the stock - just sell puts and have enough cash in the account for when you eventually get assigned. Saves you the $5 fee if that’s what you’re concerned about.

That's exactly what I was talking about. good to know there is a name too.
When you say "you’ll need to manage all the buying/selling yourself" I guess you are referring IBKR? Can you elaborate on this, please?
I thought on both the platfforms options get assigned automatically.

shakedown

Sorry, by managing the buying/selling yourself, I meant you’ll need to create the sell orders yourself. You can’t just click a button in either platform that says “run the wheel on AAPL” and have everything execute automatically. For vertical spreads, condors, butterflies etc. you can click a button and they both will setup the order structure, which you can then adjust the values before executing. Makes things a bit easier.

Assignment happens automatically on both platforms - but you won’t be able to sell the initial put option without having enough spare cash or margin in your account to cover assignment.

Either platform can do what you need - create accounts on both and see which you prefer.

gvgdhar

shakedown wrote: »

Sorry, by managing the buying/selling yourself, I meant you’ll need to create the sell orders yourself. You can’t just click a button in either platform that says “run the wheel on AAPL” and have everything execute automatically. For vertical spreads, condors, butterflies etc. you can click a button and they both will setup the order structure, which you can then adjust the values before executing. Makes things a bit easier.

Assignment happens automatically on both platforms - but you won’t be able to sell the initial put option without having enough spare cash or margin in your account to cover assignment.

Either platform can do what you need - create accounts on both and see which you prefer.

That was quite useful info. Thanks you for patiently explaining

Da11

Hey

Has anyone used the sell puts as the way to buy a cheaper stock ?

I never used options so it could be a daft question..

Thank you

GalwayMagpie

Da11 wrote: »

Hey

Has anyone used the sell puts as the way to buy a cheaper stock ?

I never used options so it could be a daft question..

Thank you

Yes, I do it quite often. Think of it as a limit order but it has a specific expiry...and you get paid.

You'll find all you need to get started here :

https://www.lynalden.com/selling-put-options/#:~:text=When%20you%20sell%20a%20put,expiration%20date”)%20from%20them.

dubrov

I always thought when people talked about options trading, they were talking about trading volatility.

Most of the above posts seem to just use options to get leveraged positions

Bob Harris

dubrov wrote: »

I always thought when people talked about options trading, they were talking about trading volatility.

Most of the above posts seem to just use options to get leveraged positions

For me it's about leverage anyway.
I have some long expiry call options, I front the premium which is the max I can lose but can pocket potentially much bigger gains if the share price is above the strike price before expiry and the leverage part is that I dont have my capital tied up.
Eg the share price is €5
The option costs 0.50c (or 50€ per call as each call is 100 shares)
Strike is €7 in Feb 2022.
I buy two calls costing €100 (my max loss)....if I bought the shares the cost is €1000 I have to pay now.
If they go to €10 on or before expiry I earn (10-7-0.50) ie 2.50€ per share x 200...500€ net gain.
If they are 7€ or less at expiry they are worthless and it's only cost me the €100 premium.

Had I bought the shares at 5€ and sold at 10~ my gain is 5x200 = €1000 or 100%.

My gain with the call is €500 or 400% and I kept the other 900€ for other uses.

GalwayMagpie

dubrov wrote: »

I always thought when people talked about options trading, they were talking about trading volatility.

Most of the above posts seem to just use options to get leveraged positions

There are so many uses for options, however as Implied Volatility has a large bearing on the option price trading options is a volatility trade. But you can use them for speculation, hedging, reducing cost basis and income generation.

dubrov

Just seems like a wild punt if held as a naked position

gvgdhar

shakedown wrote: »

Sorry, by managing the buying/selling yourself, I meant you’ll need to create the sell orders yourself. You can’t just click a button in either platform that says “run the wheel on AAPL” and have everything execute automatically. For vertical spreads, condors, butterflies etc. you can click a button and they both will setup the order structure, which you can then adjust the values before executing. Makes things a bit easier.

Assignment happens automatically on both platforms - but you won’t be able to sell the initial put option without having enough spare cash or margin in your account to cover assignment.

Either platform can do what you need - create accounts on both and see which you prefer.

Finally, I got my IBKR activated. But I don't see stock options for US stocks. It has listed me only 9 European countries and 2 Asian countries. Do I need to configure anything to get US stock options?

GalwayMagpie

gvgdhar wrote: »

Finally, I got my IBKR activated. But I don't see stock options for US stocks. It has listed me only 9 European countries and 2 Asian countries. Do I need to configure anything to get US stock options?

Yes, in account management you'll need to apply for options trading.

There is a short test, so be prepared

gvgdhar

GalwayMagpie wrote: »

Yes, in account management you'll need to apply for options trading.

There is a short test, so be prepared

I had applied for options trading, but it was showing only EU and Asian stocks.
I had to give a minimum of 100 trades in options to get this activated.
Thank you.

Da11

Thank you , I'll read it up