We Are in Bear Market


#824

Covered call is level 1 - the most basic. You can only sell 1 call for each 100 shares held. May be you try to sell too many calls.

I don’t have TSLA. Doing this will become shorting naked calls :grinning: I have the highest level so I can do this but is too risky for a small fry like me. More suitable for professionals.


#825

if you do not have shares of TSLA and expect to go $250

When it hits $250, that should automatically buy $250 shares.

Do you suggest Sell Call or Sell put ? Can you tell me if I decide to buy 400 TSLA shares at $250?


#826

GTC Buy $250. Buy the shares :slight_smile:


#827

In options, when it hits $250 It needs to buy automatically. You taught me something like short put?


#828

It won’t :slight_smile: I think my explanation is not good :pensive:


#829
  • Selling a Put - You have an obligation to buy the security at a predetermined price to the option buyer.

Characteristics of Prudent Put Selling

Sell puts only if you’re comfortable owning the underlying security at the predetermined price because you’re assuming an obligation to buy if the counter-party chooses to sell. In addition, only enter trades where the net price paid for the underlying security is attractive. This is the most important consideration in selling puts profitably in any market environment. (There are other reasons to sell puts, especially when executing more complex options strategies. Learn more in Iron Condors Fly On Fragile Wings and Advanced Option Trading: The Modified Butterfly Spread.)

Other benefits of put selling can be exploited once this important pricing rule is satisfied. The ability to generate portfolio income sits at the top of this list because the seller keeps the entire premium if the sold put expires without exercise by the counter-party. Another key benefit: the opportunity to own the underlying security at a price below the current market price.

Put Selling In Practice

Let’s look at an example of prudent put selling. Shares in Company A are dazzling investors with increasing profits from its revolutionary products. The stock is currently trading at $270 and the price-to-earnings ratio is under 20, a reasonable valuation for this company’s fast growth track. If you’re bullish their prospects, you can buy 100 shares for $27,000 plus commissions and fees. As an alternative, you could sell one Jan $250 put option expiring two years from now for just $30. That means the option will expire on the third Friday of January two years from now and has an exercise price of $250. One options contract covers 100 shares, allowing you to collect $3,000 in option premium over time, less commission.


#830

In options, you must understand the difference between

  1. naked and secured/ covered. Secured mean you have the cash to buy the shares if assigned - related to sell put. covered means you owned the shares, and can let your shares called away - related to sell calls. Naked means you’re not secured or covered.

  2. expired and assigned/ called away. Assigned means you are forced to buy the share at stipulated price (strike price of sold put). Called away means you are forced to sell the share at stipulated price (strike price of sold call). Expired means your options become worthless on OE.

Typical Option Level
Level 1 - Allow to sell covered calls vs shares held. 1 call per 100 shares held. Sometimes can allow sell secured puts.
Level 2 - Allow to buy calls and puts + level 1. Usually sell secured puts is in this level.
Level 3 - Allow to buy spreads + level 2.
Level 4 - Allow anything :slight_smile: such as sell naked calls and puts which is the most risky option position.


#831

Some hedge fund guy in Hong Kong. He likes amazon and 10c. HK accent is just as horrible as singlish. :scream:

https://www.bloomberg.com/news/videos/2018-11-23/amazon-tencent-sun-hung-kai-properties-favored-ample-capital-says-video


#832

Everybody likes Sun Hung Kai in Hong Kong :sweat:


#833

Maybe I should buy some of their stocks…


#834

Almost there.


#835

It will get there next week. I am expecting more drama about the trade war.


#836

Santa coming? Time to bet the farm? :smile:


#837

#838

2-5 year is 1 basis pt!!! :scream:

https://www.bloomberg.com/markets/rates-bonds/government-bonds/us


#839

:scream: :rotating_light: :scream_cat: :rotating_light:

The Flattening Yield Curve Just Produced Its First Inversion

https://www.bloomberg.com/news/articles/2018-12-03/the-flattening-yield-curve-just-produced-its-first-inversion


#840

Why are you so fear mongering? Today is a big happy up day. Let people breathe better for day at least.


#841

Fear is healthy. It keeps people alive. :scream:


#842

Powell has managed to produce the inversion. It was not really necessary to raise rates so much. If he raises again in December, risk will be even higher. If he continue to raise rate in 2019, recession will come soon.

We need to teach Powell how to be measured and cautious.


#843

No mention of yield on CNBC front page.

#bullish