Either roll or buy back the puts at a loss.

Keep in mind when you sell a put if in the money it will be assigned.
Yes you need to cough out cash to buy 100 shares.

That's why I don't do naked calls. All my stuff are covered.
I only do naked puts. Cause I don't mind getting assign and it's just like buying house on loan. Sell covered call on it and slowly pay down the principal and interest.

But with interest rate increasing, my amount of naked puts have reduced to basically usd30k/year (basically enough for my options premium to cover + my salary at rm5k/month)

Like mentioned, if assigned I am ok with it cause the amount of premium I can generate is about half of that usd30k and I want to get assigned.

This post has been edited by Ramjade: May 26 2022, 04:24 PM

yea i know. just hinting what Toku's setup actually is

This post has been edited by Medufsaid: May 26 2022, 04:25 PM

You can do options on etf like spy, and qqq.You don't need to do options on stocks only. I just like stocks cause I don't like the rubbish that comes with etf. Like Boeing, intel, IBM.

Make your life simple. Buy etc and do options on them. Can sleep well at night too.

This post has been edited by Ramjade: May 26 2022, 04:27 PM

Sorry, I was under the impression that the stock is what he wants to invest and he just want to lower his cost? May be I have mistaken.
That is just one way that I know to lower the cost of stock I want to keep, without having to take risk to sell it and hope to be able to buyback at a lower price.

I admired your fortitude. You basically all-in with options. Your tactics seems to be flawless. And I think in a sideway market, it is something I can do with a part of my portfolio.

May be you could re-evaluate again on your pricing ladder? Like someone posted before, an entry price mistake will take lots of % in returns to recover the loss. The stock price at current level is still overvalue....why waste your part time income...
While building your wealth, live your life as well... Money is not everything, spend it and enjoy life...

It's never flawless. It's whether market shoot up or down too much.
Well I aim to achieve FAT FIRE in 10 years. So no choice need to grind. I have counted can't even achieved THIN FIRE on dividends but not impossible to achieve Mid to FAT FIRE with options and side income.

First time I heard FAT FIRE and THIN FIRE. What are they?

Fat fire means you have more than enough.
Thin fire means might be just enough and may require calculations/budget.

This post has been edited by Ramjade: May 26 2022, 11:49 PM

https://www.businessinsider.com/personal-fi...retirement-fire

It's funny that sometime i felt that whatever i posted, the market will go oppose me. Still, doesn't stop me to continue research and try out. I sell CC on PLTR at the strike of $8.5 on 24-May which at the time is trading around $7.6 didn't expect the deal which boosted their stock, too late to close the option just now, but nevertheless I will Sell Puts to buy it back at $8.5 next week.

Maybe I'll free up my $$ by buying Long Call instead and do PMCC or just totally ignore and let the stock grow and exercised the Call options when i remember, while using the $$ to buy other growth stocks to accumulate shares.

I have a few questions For PMCC

PMCC = which you are Buying a LONG deep ITM Call with around 180 DTE. Then selling a SHORT OTM Call with DTE <60 or whichever DTE you feel good about it.

Let's take AMD for example, Reference: AMD inc Yahoo Options Chart
- Buy Long Calls with the strike price $90 expiry on 16-December with the premium of $26.16.
- Sell Short Calls against it with the strike price of $120 expiry on 19-August with the premium of $5.75.

Questions:-
1) The total amount that I need to pay for the Buying the Long Call is $2616. Can i assume the breakeven price for this options excluded the Selling Calls is $116.16? (26.16+90.00). Meaning if AMD rises above $130, I'll be making profit if i exercised the call options anytime before Expiry and sell it immediately? (Provided i have the upfront cash to buy the entire share at $9000)

2) After i sell the calls for $575, my total cost for this PMCC is $2051. Next is to wait till 19-August, if it expired worthless then only i can sell another calls?
2a) What if the Short Call got exercised? Since I'm using IBKR, does the initial Long Call exercised automatically? or IBKR will treated as "Naked Calls" and ask me to cough out 100 AMD shares?
2b) If the short call got exercised, how much did i lost in total?

3) If i don't have enough cash to exercise the long call (buying the 100 shares before the long call expired), I'll have to sell a short calls to ensure it got called away before the expiry date?

Still a toddler here

enter it in ibkr, and it will show a p/l chart for you... you can also use many other options calculators on the web to visualize the trade

your bull call diagonal debit spread... is most profitable at 120 strike at expiry... and you want prices around here for both legs... lol... manage your trade based on this p/l chart... don't simply trade without proper understanding, your short calls shouldn't be naked unless it's deeply otm... but you'll need to manage your long call too...

practice paper trading first lah... anyways have fun...

This post has been edited by dwRK: Jun 5 2022, 10:31 AM

Answering from my phone, so not gonna format my answers

Questions:-
1) The total amount that I need to pay for the Buying the Long Call is $2616. Can i assume the breakeven price for this options excluded the Selling Calls is $116.16? (26.16+90.00). Meaning if AMD rises above $130, I'll be making profit if i exercised the call options anytime before Expiry and sell it immediately? (Provided i have the upfront cash to buy the entire share at $9000)
just sell back the option. You'll forfeit timevalue if you convert to shares before expiry
2) After i sell the calls for $575, my total cost for this PMCC is $2051. Next is to wait till 19-August, if it expired worthless then only i can sell another calls
can rollover to further dates
2a) What if the Short Call got exercised? Since I'm using IBKR, does the initial Long Call exercised automatically? or IBKR will treated as "Naked Calls" and ask me to cough out 100 AMD shares?
your long call still has time value, I hope ibkr converts to a $120 short position. Your call will now become a synthetic put
2b) If the short call got exercised, how much did i lost in total?
if it's now a synthetic put, then there's max loss and unlimited gain, well until stock reaches $0
3) If i don't have enough cash to exercise the long call (buying the 100 shares before the long call expired), I'll have to sell a short calls to ensure it got called away before the expiry date?
can always rollover
Still a toddler here


This post has been edited by Medufsaid: Jun 5 2022, 02:46 PM

You should not exercise the calls even if you profit because you will be losing time value and it is costly to exercise. Usually you will sell to close.

At expiry, your BEP will be $116.16 without short call. If you sold the Aug call, it will be $110.41 (26.16+90.00-5.75) and your max loss will be $2,041 (26.16-5.75) if the share price is below $90.

Note that your longer DTE call that you bought is subject to greater IV crush/IV gain since it has longer DTE than the shorter call. This means you could incur loss or gain before even reaching expiry.

You can always roll before expiry. Of course, holding till the 19 Aug call expires gives you the most theta decay.

After it expires, whether you want to sell another call depends on the share price. If the stock price is below $90 on 20 August, you won't want to sell calls below $90 strike price. Meanwhile, selling calls above $90 strike price will give you peanuts. Like for real peanuts. Maybe like $200 max for 3 months DTE depending on IV.

Your short call should not be automatically exercised near expiry unless it is deep ITM. Anyhow, it is better to roll or close it rather than allow your broker to do funny things and also for a peace of mind.

It is likely that you will be short selling AMD shares i.e. cough out the shares if your short call gets exercised. This means you may incur short selling interest fees.

Your loss from the short call should be offset with the long call. The risk is when the stock spikes above $120 on 19 August, you buy to close, then the stock crashes below $90 by December.

This is why if your shorter DTE call is deep ITM and about to be exercised, just close it with the long call.

Can't tell for sure but likely a net gain. Sometimes you will still be in a loss although your short call did not get exercised because of IV crush on your long call.

This is why people don't usually buy calls when IV is high.

No.

Also, keep in mind that if AMD is below $90 in December, you might lose around $2k if things go South. You might be better off selling naked/covered put or bull put spreads at around $70 or $80 strike price to be on the safe side.

op... just to add... imho this is not a good trade...

you risk about 2k for only 1k gain with only around 50% prob of success... ok good for learning lah... hahaha


This post has been edited by dwRK: Jun 5 2022, 04:40 PM

Still taking baby steps at a time, always felt like just touching the surface of it... wondering why it's so hard for me to understand PMCC...

After i posted my previous, i go ahead and watch couple more of videos explaining on PMCC, and you probably guessed it right ~ i still have few underlying question that I wonder why most video don't talk about it. Firstly, I found that PMCC is just a term for a variant of Diagonal Spread or to be specified Calendar Spread (I'm dumbass). I also realized that buying the Long Call doesn't mean you own the 100 shares of the stock, you just own the "Options" so when something happen with your Short Calls falls ITM and got assigned, the brokerage will do the stupid right thing and liquidate any asset that you're holding except the Long Call Options, as most brokerage did not see the option as your "Asset".

So then, most videos discuss the Pros and Cons about using PMCC where the maximum risk only the amount of the money you paid for the premium on the initial Long Call + any subsequent premium if you roll or close your Short Call options at a loss. I wonder why none of the video that i watched mention about what to do with the Initial Long Call position? Is it i missing something here?

From my understanding, if you "Buy" to open a Call position and didn't do anything about it, the "Buy" option will reach it expiry date and expired worthless. And from those video i watched, I don't see how you can continue to sell a short call until it can cover the entire premium for the initial long call and still make a profit from it. So in the end i still have to cough out $9000 to fulfil the Long buy Option at expiry? (i really thing i missing something here, hope anyone can pointed it out)

p/s: Pretty sure all the sifu out there are planning to gang me on this... :

come i share imho the best site to learn everything about options... ppl can pay good money elsewhere to learn and wont be half as good... https://optionalpha.com/courses

which videos do you watch?

So complex

I will try paper trading at options first before trying out the real thing.