Options trading

bryangiggsy · 10-11-2015 3:06pm #1

Been following the Where do i start program on tastytrade.com and am planning on spending the next few months immersing myself in information on options trading while i save some money to get started. Has anyone here any tips or advice for someone starting from Ireland that might not be covered on the platform? Cheers

phantom_lord · 10-11-2015 4:18pm

My main tip would be don't start. There's lots and lots of money to be made in options, just not for the average retail trader.

nuac · 19-11-2015 3:31pm

Good advice from Phantom Lord

The value of an option can dwindle rapidly as it's time expires.

Option trading is only for experienced professionals with time to monitor trades

phantom_lord · 19-11-2015 8:09pm

Very easy to end up like this guy

https://twitter.com/jwctrek/with_replies

beard_grower · 19-11-2015 8:12pm

i do thee odd options trade , i do it with stocks which have strong fundamentals , if a stock is down big for a few days despite no major news , il buy a call , i usually sell it too soon but i make a little money

by accident i made a nice sum on august 24th the day the markets crashed for a brief period , i have bought apple ( august 28 th ) puts about three weeks previous , on august 24th , they skyrocketed in value and i made $900 from an investment of less than $200

not often you get lucky like that , lost money buying calls in exxon mobil as the energy market kept on falling and they expired worthless

i would never spend more than a small sum trading options

nuac · 20-11-2015 3:19pm

I have made money also on both put and call options, but also lost money.

You need to have a lot of time and energy to watch them. Not for the faint hearted.

If you have other things to do, you are as well to buy some shares in solid companies.

For generations may some families did just that, i.e. holding shares in banks from generation to generation. Worked well until about 2008

LennyDunman · 18-05-2020 9:07am

Hi BryanGiggsy, I've just started looking into this myself (Options trading - specifically free training on optionalpha.com which is a time investment that I'm happy to do if this is not a mirage in the desert!) and came across this thread - I'm wondering if you ever ended up going anywhere with it and if it's viable or run-a-mile territory or if any thoughts?
And whether the platforms allow it to work ok from Ireland as if you were anywhere in the world?
And the time commitment required if you have found success with it?

Jim2007 · 18-05-2020 12:11pm

LennyDunman wrote: »

Hi BryanGiggsy, I've just started looking into this myself (Options trading - specifically free training on optionalpha.com which is a time investment that I'm happy to do if this is not a mirage in the desert!) and came across this thread - I'm wondering if you ever ended up going anywhere with it and if it's viable or run-a-mile territory or if any thoughts?
And whether the platforms allow it to work ok from Ireland as if you were anywhere in the world?
And the time commitment required if you have found success with it?

That user was banned and has not been on the boards since 2015.

- The most important advantage an investor has is time... time for a bad decision to work itself out... when you deal options, you give up that advantage.

- If trading options is such good deal, why are these guys trying to sell you courses rather than trading themselves? Could it be that the best way to make money out of options, is to sell courses, reports, tools etc...

- Have you ever heard of an issuer to loose money on the options?

Yes you can make some money out of trading options, but to do so consistently over time you are going to have to be better than everyone else in the market and do it under time constraints.

outonawing · 18-05-2020 3:25pm

I think BryanGiggsy is still active on Boards, beard_grower though is banned.

I know very little about options.

codrulz · 18-05-2020 4:11pm

Not sure there are many brokers offering options in Ireland, most of the focus is on CFDs/spread bets.
Options are much more prevalent in the US (a la Wallstreetbets) as CFDs were banned several years ago. Theta decay alone will take most of your profitability and as a few institutional traders have said many times to me; why bother paying the premium when you can just buy spot? You then don't have to deal with the greeks or a breakeven price.

shakedown · 18-05-2020 9:31pm

r/Wallstreetbets has given options trading a (self-proclaimed) notorious reputation, but there are also safe strategies that can be run. It does take a large time commitment though to learn how not to lose your pants.

https://www.optionsplaybook.com/ is a good beginners resource.

Tastyworks and Interactive Brokers can be used from Ireland.

Mach 3 · 03-06-2020 8:17pm

Options expiring june 19. US Equities deep in the money for most and the train keeps chugging along.

No sign of profit taking yet, ambitious buying if anything.

OP, watch the action in the lead up to expiry and afterwards in the underlying market.

GalwayMagpie · 13-09-2020 10:08pm

How are options taxed, in-particular how are the premiums taxed?

I've looked on the revenue, but I cannot find anything in relation to taxation on options. If you are chasing theta, really it is the premium you end with and not the proceeds of share sales. Is that still taxed at CTG rates?

P.S. r/Wallstreetbets has been very educational/entertaining. Mostly in how not to do things, however that community has the odd person that does know what they are doing.

tax_moron · 07-01-2021 2:36pm

GalwayMagpie wrote: »

How are options taxed, in-particular how are the premiums taxed?

I've looked on the revenue, but I cannot find anything in relation to taxation on options. If you are chasing theta, really it is the premium you end with and not the proceeds of share sales. Is that still taxed at CTG rates?

I asked this very question on askaboutmoney (I cannot post links so search for: "askaboutmoney What is the tax on selling of Cash Secured Puts (and with assignment Covered Calls)")

I'm presuming it will all fall under income tax but it's not entirely clear. If I'm bullish on a stock for example, starting off, I'd agree that premiums would fall under income tax (e.g. if I plan on selling weeklies), but if I am continuously selling CSPs and CCs on a specific stock as I believe it to go up in value, this in my mind is an investment, not a trade (in terms of the difference in strike prices that is, not the premiums). For example:

So if I sell cash secured puts, the premium is income tax, which I can agree with.

If the puts get assigned, and I begin to sell covered calls at a higher strike than what they were bought at (because I'm bullish on the stock as a whole); and they are also assigned, I feel as though the gain from the difference in strike prices should be CGT, while the premium from selling the covered calls will be under income tax.

I'm not sure though if this is the case, this is just my interpretation of it.

Also I have an unrelated question regarding tastyworks. I have a tastyworks account set up with <€1k to test the product, but has anyone here dealt with using tastyworks funded via currencyfair for large (to me) sums of money like €60k+?

Thanks in advance!

GalwayMagpie · 08-01-2021 10:30am

tax_moron wrote: »

I asked this very question on askaboutmoney (I cannot post links so search for: "askaboutmoney What is the tax on selling of Cash Secured Puts (and with assignment Covered Calls)")

I'm presuming it will all fall under income tax but it's not entirely clear. If I'm bullish on a stock for example, starting off, I'd agree that premiums would fall under income tax (e.g. if I plan on selling weeklies), but if I am continuously selling CSPs and CCs on a specific stock as I believe it to go up in value, this in my mind is an investment, not a trade (in terms of the difference in strike prices that is, not the premiums). For example:

So if I sell cash secured puts, the premium is income tax, which I can agree with.

If the puts get assigned, and I begin to sell covered calls at a higher strike than what they were bought at (because I'm bullish on the stock as a whole); and they are also assigned, I feel as though the gain from the difference in strike prices should be CGT, while the premium from selling the covered calls will be under income tax.

I'm not sure though if this is the case, this is just my interpretation of it.

Also I have an unrelated question regarding tastyworks. I have a tastyworks account set up with <€1k to test the product, but has anyone here dealt with using tastyworks funded via currencyfair for large (to me) sums of money like €60k+?

Thanks in advance!

I had read somewhere that depending on the circumstances in which you were trading, premium from options could be classed as income tax or cgt, I cannot remember the exact terms that were used but it was something on the lines of frequency and method.

I asked Revenue how this was taxed, I specifically told them I was buying and selling options contracts, not taking assignment of the underlying and this was not my primary source of income. They responded with :

In the event that you make a gain from option contracts cgt will be due on the chargable gain. Please refer to our website for Capital gains tax on the sale, gift or exchange of an asset.

So I'm putting it under CGT.

Bawa · 11-01-2021 2:57am

GalwayMagpie wrote: »

How are options taxed, in-particular how are the premiums taxed?

I've looked on the revenue, but I cannot find anything in relation to taxation on options. If you are chasing theta, really it is the premium you end with and not the proceeds of share sales. Is that still taxed at CTG rates?

P.S. r/Wallstreetbets has been very educational/entertaining. Mostly in how not to do things, however that community has the odd person that does know what they are doing.

usually ordinary income rates unless assigned and then taxed based on your holding period.

GalwayMagpie · 12-01-2021 8:03am

Bawa wrote: »

usually ordinary income rates unless assigned and then taxed based on your holding period.

Check out the end of this thread on how something is classed as a trade or investment.

https://touch.boards.ie/thread/2057726807

tax_moron · 12-01-2021 10:38am

GalwayMagpie wrote: »

Check out the end of this thread on how something is classed as a trade or investment.

Thank you! OK so premiums are also GCT if that is the case, for me at least.

Ogmaestro · 17-01-2021 8:44pm

tax_moron wrote: »

I asked this very question on askaboutmoney (I cannot post links so search for: "askaboutmoney What is the tax on selling of Cash Secured Puts (and with assignment Covered Calls)")

I'm presuming it will all fall under income tax but it's not entirely clear. If I'm bullish on a stock for example, starting off, I'd agree that premiums would fall under income tax (e.g. if I plan on selling weeklies), but if I am continuously selling CSPs and CCs on a specific stock as I believe it to go up in value, this in my mind is an investment, not a trade (in terms of the difference in strike prices that is, not the premiums). For example:

So if I sell cash secured puts, the premium is income tax, which I can agree with.

If the puts get assigned, and I begin to sell covered calls at a higher strike than what they were bought at (because I'm bullish on the stock as a whole); and they are also assigned, I feel as though the gain from the difference in strike prices should be CGT, while the premium from selling the covered calls will be under income tax.

I'm not sure though if this is the case, this is just my interpretation of it.

Also I have an unrelated question regarding tastyworks. I have a tastyworks account set up with <€1k to test the product, but has anyone here dealt with using tastyworks funded via currencyfair for large (to me) sums of money like €60k+?

Thanks in advance!

How has your experience been with tastyworks?

Mad_maxx · 22-01-2021 4:44pm

bought an out of the money January 22nd ( today ) $255 Facebook call a little over a week ago @ $320 when the stock was around $245

currently worth $2100

not often you get a gain like that

GalwayMagpie · 23-01-2021 1:16am

Mad_maxx wrote: »

bought an out of the money January 22nd ( today ) $255 Facebook call a little over a week ago @ $320 when the stock was around $245

currently worth $2100

not often you get a gain like that

Nice.

Sell it back or take assignment?

Mad_maxx · 23-01-2021 12:46pm

GalwayMagpie wrote: »

Nice.

Sell it back or take assignment?

closed at 7 pm yesterday , would have been worth about $200 more had i closed at the open yesterday but was worth less at close of trading yesterday so a nice $ 1700 gain from an initial $320 spend

Prezatch · 26-01-2021 11:22pm

Mad_maxx wrote: »

closed at 7 pm yesterday , would have been worth about $200 more had i closed at the open yesterday but was worth less at close of trading yesterday so a nice $ 1700 gain from an initial $320 spend

Broker?

Kilboor · 26-01-2021 11:45pm

Mad_maxx wrote: »

bought an out of the money January 22nd ( today ) $255 Facebook call a little over a week ago @ $320 when the stock was around $245

currently worth $2100

not often you get a gain like that

I'm tempted to start a little options trading. I was looking at some call options for Baozun last night on Yahoo finance. Premium was .10 for 45 dollar calls for February 19th. I sent a mate of mine a message saying that's worth a cheeky punt if we could only easily trade options in Ireland.

Anyway today that option is up 5000% :rolleyes: First time I've ever looked at them

Even the 40 dollar call options are up 1600%.

Share price was 35 yesterday, 48 today.

Mad_maxx · 27-01-2021 11:16am

Prezatch wrote: »

Broker?

i use Saxo uk

Mad_maxx · 27-01-2021 11:18am

had someone invested as little as $50 a week ago ( when stock was at $35 ) in a single $ 45 GME call which expires this coming Friday

they would today be sitting on $10000 today

thats a once in a century trade

shakedown · 27-01-2021 4:14pm

Mad_maxx wrote: »

had someone invested as little as $50 a week ago ( when stock was at $35 ) in a single $ 45 GME call which expires this coming Friday

they would today be sitting on $10000 today

thats a once in a century trade

(Not that im against it), but that's not investing. Trading at best, gambling more likely. It's easy to cherry pick winner/loser examples in hindsight.

Bawa · 29-01-2021 9:02pm

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.

gvgdhar · 30-01-2021 11:39am

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

codrulz · 30-01-2021 12:39pm

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

IBKR does options

Mad_maxx · 30-01-2021 12:42pm

shakedown wrote: »

(Not that im against it), but that's not investing. Trading at best, gambling more likely. It's easy to cherry pick winner/loser examples in hindsight.

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

Mad_maxx · 30-01-2021 12:45pm

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 · 30-01-2021 7:35pm

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 · 30-01-2021 7:38pm

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 · 31-01-2021 1:10am

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 · 31-01-2021 3:59am

GalwayMagpie wrote: »

Selling options can be a quite profitable pastime.

Tell us more

Davauer · 31-01-2021 5:57am

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

gvgdhar · 31-01-2021 8:18am

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 · 31-01-2021 9:05am

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 · 31-01-2021 9:24am

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 · 31-01-2021 9:50am

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 · 31-01-2021 1:26pm

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 · 31-01-2021 2:30pm

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 · 31-01-2021 6:36pm

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 · 20-02-2021 1:53pm

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 · 21-02-2021 2:13am

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 · 21-02-2021 8:57am

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 · 21-02-2021 9:52am

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 · 21-02-2021 6:48pm

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 · 21-02-2021 7:11pm

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

gvgdhar · 23-02-2021 9:27pm

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?

Options trading

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