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 Options Q&A and Discussions, Covered calls, protective puts...

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kimhoong
post Nov 24 2021, 03:33 PM

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Good to see Options Trading group in the community.

I've just started my Options Trading journey recently with a small account with mostly selling spreads but made a mistake with trying out synthetic (but selected short DTE due to unfamiliarity to IBKR interface) on SQ! Got burnt due to that.

Can any sifus share on how to monitor your position especially on spreads or other strategies/combo in IBKR?

I learn Options Trading from a course using TOS but due to hefty fund transfer from Malaysia (I got CIMB SG account but TOS only favors DBS/POSB for electronic transfer, others have to go through normal wired transfer). It will be good if you could share your experience and your view on this.
roams.behinds
post Nov 30 2021, 04:20 PM

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Have been using both ib n tos for 5 years. Tos UI n features No doubt is one of best industry. But recent years only use ib due to low fee n worldwide markets support n cheaper easy for funding.

If you believe SQ will rebound eventually n have sufficient margin cushion downside, it’s completely ok close existing position when dte exipires n open new synthetic bull position with longer dte (as long as u wish wink.gif

In IB app there is “options” tab which seems helpful monitoring options expiry date.

Depends on risk appetite n profit target I also use “unrealized profit %” helping decide exit timing. Usually for spread I m happy exit when reaching 50-80% profit.



QUOTE(kimhoong @ Nov 24 2021, 03:33 PM)
Good to see Options Trading group in the community.

I've just started my Options Trading journey recently with a small account with mostly selling spreads but made a mistake with trying out synthetic (but selected short DTE due to unfamiliarity to IBKR interface) on SQ! Got burnt due to that.

Can any sifus share on how to monitor your position especially on spreads or other strategies/combo in IBKR?

I learn Options Trading from a course using TOS but due to hefty fund transfer from Malaysia (I got CIMB SG account but TOS only favors DBS/POSB for electronic transfer, others have to go through normal wired transfer). It will be good if you could share your experience and your view on this.
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kimhoong
post Nov 30 2021, 06:44 PM

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QUOTE(roams.behinds @ Nov 30 2021, 04:20 PM)
Have been using both ib n tos for 5 years. Tos UI n features No doubt is one of best industry. But recent years only use ib due to low fee n worldwide markets support n cheaper  easy for funding.

If you believe SQ will rebound eventually n have sufficient margin cushion downside, it’s completely ok close existing position when dte exipires n open new synthetic bull position with longer dte (as long as u wish wink.gif

In IB app there is “options” tab which seems helpful monitoring options expiry date. 

Depends on risk appetite n profit target I also use “unrealized profit %” helping decide exit timing. Usually for spread I m happy exit when reaching 50-80% profit.
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Guess I'm using the right column of "unrealized profit %" my main reference when monitoring my positions.

Can you share how do you fund TOS?
roams.behinds
post Nov 30 2021, 08:06 PM

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QUOTE(kimhoong @ Nov 30 2021, 06:44 PM)
Guess I'm using the right column of "unrealized profit %" my main reference when monitoring my positions.

Can you share how do you fund TOS?
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I stop fund tos. Mainly use ib.
Ramjade
post Nov 30 2021, 08:32 PM

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QUOTE(kimhoong @ Nov 30 2021, 06:44 PM)
Guess I'm using the right column of "unrealized profit %" my main reference when monitoring my positions.

Can you share how do you fund TOS?
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Use telegraphic transfer. Pay higher exchange rate + TT fees + intermediate fees.

If you have access to sg bank account, you can try FAST transfer even though on paper it mentioned that they accept only DBS/POSB.

Keep in mind TD conversion fees is not as cheap as IB.
kimhoong
post Dec 4 2021, 05:28 PM

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QUOTE(Ramjade @ Nov 30 2021, 08:32 PM)
Use telegraphic transfer. Pay higher exchange rate + TT fees + intermediate fees.

If you have access to sg bank account, you can try FAST transfer even though on paper it mentioned that they accept only DBS/POSB.

Keep in mind TD conversion fees is not as cheap as IB.
*
I have access to SG Bank (only CIMB SG) to fund for my IBKR but never try what you mentioned to TOS. I wrote to TOS and got feedback that I can only wired transfer to their bank account in US. Below is their reply for those who are interested:

» Click to show Spoiler - click again to hide... «



Have anyone tried to fund TOS using WISE? Can you share the experience and total cost?
One reference I found in Youtube (but not from Malaysia)


This post has been edited by kimhoong: Dec 4 2021, 05:31 PM
Ramjade
post Dec 4 2021, 11:52 PM

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QUOTE(kimhoong @ Dec 4 2021, 05:28 PM)
I have access to SG Bank (only CIMB SG) to fund for my IBKR but never try what you mentioned to TOS. I wrote to TOS and got feedback that I can only wired transfer to their bank account in US. Below is their reply for those who are interested:

» Click to show Spoiler - click again to hide... «

Have anyone tried to fund TOS using WISE? Can you share the experience and total cost?
One reference I found in Youtube (but not from Malaysia)

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From chatting with people who used TOS, they do accept FAST transfer form other sg banks.

That is one way you can do. But I am not sure if money send via ACH is it under your name or TransferWise name. If it's under TransferWise name, it will be rejected (third party transfer not allowed)
SUSTOS
post Dec 23 2021, 01:58 PM

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https://www.cnbc.com/2021/12/22/options-tra...-investors.html
SUSTOS
post Jan 28 2022, 09:53 PM

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I recently borrowed this book from my uni's library, a great read for those with finance background and retail investors alike.

Very new book written in late 2021, so it covers cryptos and SPACs as well as topics like ESG investing (oh and also GameStop...).

https://www.wiley.com/en-us/Modern+Portfoli...p-9781119818502

(You can find free PDF versions online, but due to copyrights issues I won't post any links here)

Here's the chapter on options and derivatives in general.

Since our friend Ramjade likes to promote options investing, especially "weekly options", here's something to be cautious of (from page 18 of the PDF attached, or page 607 of the actual book):

QUOTE
Imagine writing an out-of-the-money call that expires in two months, where you collect $1,000 in premium on an underlying position that is worth $50,000. Six weeks pass, and the underlying price has drifted down a bit. The call’s market price is $75. On a mark-to-market basis you have made 92.5% of the original maximum gain in the trade. Time decay is working in your favor, and as shown in Figure 10.2, the rate of decline is getting faster as expiration approaches. What do you do?

An inattentive seller might let nature take its course. After all, there is a much lower chance today of the option going into the money. An easy non-decision is to simply wait, and let the option slide into worthlessness. But what if you are wrong? If good news comes out about the company or the sector, the option could quickly move to be in the money. The chance to make an extra $75 from the remaining time decay could end up costing hundreds or thousands of dollars.

Dealing with short-dated options is a highly specialized activity often best left to professionals. Investors would do well to declare victory, buy back the very cheap option, and let someone else worry about the tail risk that can sink such a position. Most people, however, let inertia take over. The vast majority of the time, inertia will not hurt you. After it has, however, the next position in short calls will receive more attention. Remember the adage, “Bulls can make money. Bears can make money. Pigs get slaughtered.”


The last line is striking: Bulls can make money. Bears can make money. Pigs get slaughtered.

Don't be a pig... sweat.gif

P.S. If anyone wants the whole book PM me for further details.

This post has been edited by TOS: Jan 28 2022, 09:55 PM


Attached File(s)
Attached File  Modern_Portfolio_Management_Moving_Beyond_Modern_Portfolio_Theory_by_Petzel__Todd_E.__Chapter_10_Derivatives_.pdf ( 420.88k ) Number of downloads: 60
Ramjade
post Apr 25 2022, 02:57 PM

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QUOTE(Lon3Rang3r00 @ Apr 25 2022, 02:43 PM)
Any advice/guide/tips for running options for new player?
I'm looking at PLTR Sells options at $10, Then i realized that if you count premium/day, 3rd weeks usually higher offer premium/day.
Date          /Ask / Days / Per Day
29-Apr /0.04 / 5 / 0.008000
06-May /0.11 / 12 / 0.009167
13-May /0.30 / 19 / 0.015789
20-May /0.38 / 26 / 0.014615
27-May /0.44 / 33 / 0.013333
 
Then for $10.5/
 
29-Apr / 0.09 /5 / 0.018000
06-May / 0.18 /12 / 0.015000
13-May / 0.46 /19 / 0.024211
20-May / 0.54 /26 / 0.020769
27-May / 0.56 /33 / 0.016970
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3rd week will always have the higher premium as that day have the most contract expiring. Up to you do weekly or monthly. I do weekly or sometimes 2 weekly.
Lon3Rang3r00
post Apr 25 2022, 05:03 PM

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QUOTE(Ramjade @ Apr 25 2022, 02:57 PM)
3rd week will always have the higher premium as that day have the most contract expiring. Up to you do weekly or monthly. I do weekly or sometimes 2 weekly.
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Thanks, good read! your explanation on options really much better than those i see on Youtube (Or probably those channels i clicked in are craps to begin with). The Margin thing, i really need to take a look. Does it means when you're on Margin account if you purchased the options at $1k (PLTR $10 x 100 shares), only portion of your cash got locked in by the options and not the entire $1k? so you have cash to buy other stocks?

Then the Margin 1.83% interest only kicked in when your portfolio cash becomes Negative due to the stock you hold in portfolio is making losses? cry.gif Please don't bash me
Medufsaid
post Apr 25 2022, 05:25 PM

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even though the money is not fully locked in, you must have the discipline to treat it as "locked". that way you'll not trigger margin (and the interest if margin is more than cash in acct). unless of cos you decide to jump from investing to speculating/trading

This post has been edited by Medufsaid: Apr 25 2022, 06:23 PM
sgh
post Apr 25 2022, 05:57 PM

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Thanks for this thread on options trading. Already found another in Spore forum. While it look easy monies it is not really and like all investment instruments there are pro and con.

https://www.experian.com/blogs/ask-experian...w%20they%20work.

Will take a look at this soon to see if it is really fit my risk appetite. Btw why forum very few share much about play options lose monies experience? Ppl can learn from their mistake and avoid actually
Ramjade
post Apr 25 2022, 07:45 PM

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QUOTE(Lon3Rang3r00 @ Apr 25 2022, 05:03 PM)
Thanks, good read! your explanation on options really much better than those i see on Youtube (Or probably those channels i clicked in are craps to begin with). The Margin thing, i really need to take a look. Does it means when you're on Margin account if you purchased the options at $1k (PLTR $10 x 100 shares), only portion of your cash got locked in by the options and not the entire $1k? so you have cash to buy other stocks?

Then the Margin 1.83% interest only kicked in when your portfolio cash becomes Negative due to the stock you hold in portfolio is making losses?  cry.gif Please don't bash me
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If you are on margin, it won't lock up your entire cash.
It will just use your buying power.
I have done a covered put on stock worth USD20k and the amount of used was only around usd5k.(again minus from my buying power).
My cash is untouched and can do what I like with it.
Best part is the used USD5k did not incur any interest rate as my cash balance remains positive and the options expired worthless.
Hence the USD5k used for buying power is essentially free.

Yes. It's 1.83% p.a not 1.83% per month.
Medufsaid
post Apr 25 2022, 08:11 PM

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but that's bcos the put was OTM and the stock didn't suffer a severe drawdown so the margin calculated was minimal right?

in the event your put became deeply ITM, the margin will exceed the initial 5K, which might not be ideal if you didn't intend to get charged interest

This post has been edited by Medufsaid: Apr 25 2022, 08:18 PM
Ramjade
post Apr 25 2022, 08:59 PM

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QUOTE(Medufsaid @ Apr 25 2022, 08:11 PM)
but that's bcos the put was OTM and the stock didn't suffer a severe drawdown so the margin calculated was minimal right?

in the event your put became deeply ITM, the margin will exceed the initial 5K, which might not be ideal if you didn't intend to get charged interest
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Actually it's based offmhow Voltaire the stock is. If it's very volatile you need a lot of buying power if you are using margin.

Not sure about deep itm. If deep Item, I just buy back at a loss and sell options the next week.
Lon3Rang3r00
post Apr 26 2022, 04:22 PM

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Just curious, will anyone Sell Put ATM? I noticed the premium for ATM had more to cover the strike price (very small margin maybe +0.1/share). In what scenario will a person Sell Puts ATM?
Medufsaid
post Apr 26 2022, 04:26 PM

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ppl may be doing credit/debit option spreads.. or short straddles. or they are just selling and hoping to buy back cheaper in minutes/hours time

This post has been edited by Medufsaid: Apr 26 2022, 04:44 PM
Lon3Rang3r00
post Apr 27 2022, 11:36 PM

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Edited: I actually answered my own question, so i decided to ask another question.

Does rolling an options charge additional commission every time you roll?

This post has been edited by Lon3Rang3r00: Apr 27 2022, 11:40 PM
Ramjade
post Apr 28 2022, 12:54 AM

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QUOTE(Lon3Rang3r00 @ Apr 27 2022, 11:36 PM)
Edited: I actually answered my own question, so i decided to ask another question.

Does rolling an options charge additional commission every time you roll?
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Yes. There's always commission when you buy/close with interactive broker.
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