If vol and call skew is high enough on the open, maybe sell enough to where he's somewhat delta neutral....eliminate most of the immediate directional risk so he's mainly just left short upside vol and gamma.
Right. This is a great and very useful thread due to ET heavyweights’ contributions. I am far from it, but since I have been in this situation a few times, I would like to contribute my $0.05 (although I never faced margin calls) Since I am more comfortable with trading underlying, I only sell enough calls to cover my position - I am never naked short calls underwater. So my goal is to make sure my avg price is close enough to current price so that I can keep selling weekly covered calls at reasonable premium at the strike above my avg cost. If price rises above my avg, I will get out of shares at BE or better and will hope calls will expire worthless in a few days. So It’s possible for me to be naked short calls as long as they are OTM. I will be watching price closely to make sure my calls are not challenged. If price too close to strike (within overnight gap), I will not take a chance, I will get long at least half size to hedge. If price keeps rallying, I will be forced to buy the rest and try to trade out of them, basically looking to catch an intraday top. I am basically day trading hoping to be flat as price falls but with understanding that above certain price I MUST be getting long to hedge my calls. Of course the above benefits from bull rallies we’ve had. What to do when it keeps going down? Well, my only choice to recycle shares to make sure my avg price doesn’t get too far away. So reduce position on rallies and re-buy on drops or pull backs. At this point I am taking a beating but giving myself a chance to come back. Hopefully I can still able to sell calls far enough away to not get called by the end of the week. I may be wrong, but I am a strong believer that prior to trading options, one needs to be able to trade the underlying directionally. Hope this is helpful in some way. To be clear, this is not a strategy that I purposefully trade, but rather a way for me to get out of situation I did not expect to be in. It’s me playing defense the best I know how after a f#% up .
You mean you would buy the stock and exercise the put.. Or if you were short the put,you would short stock, hopefully being 100 percent sure you were assigned on the short put.. Your wording was a little confusing
Yes...Im either in a split strike fly or ratioed at least 20 percent wide..I will go tighter,1.5 to 1
Tsla moving lower, does anyone know how much margin robinhoodies need to buy tsla.. 25%? We may see some panic selling along liquidations today...